PACRA Assigns Initial Broker Management Rating to Amanah Investments Limited
|Rating Type||Broker Management|
The assigned rating reflects upon multiple facets of Amanah Investment Limited (“AIL” or the “Company”). The Company expanded brokerage operations for the public and initiated client on-boarding in the year 2020 with an intention of being a fully Shariah Compliant broker, accordingly the assessment is based on initial performance and going forward plans. Prior, AIL was only focused on running its Propriety Book since 2015. The assigned rating incorporates adequate ownership structure, sound internal controls, adequate client servicing, and strong business acumen of the sponsor. The Company has an adequate governance framework which may be enhanced through the inclusion of independent board members. Increasing the board size may also support the formation of independently represented board-level committees. The Company has an adequate internal control framework which is subsequently supported by established policies; however, the inclusion of an independent internal audit department would be a strengthening factor. The assigned rating takes into account a sound IT infrastructure supported by defined IT, disaster recovery, and backup policies. AIL provides prudent services to its clients in the form of complaint management, order recording, and reporting mechanism. The organizational structure of the Company is commensurate with the start-up stage. AIL emphasizes trading only in a Shariah-Compliant manner and operating on the Islamic principles of trading. Whilst the initiative is commendable and the Company will have the privilege of capturing a niche market, the Company will not be able to deal in MTS, MFS, and other leverage-based products. The Company plans to improve its outreach by launching an online platform integrated with RDA. There are further plans for the expansion of the research department which would aid in enhancing client relationships and would help in the on-boarding of corporate clientele. Successful execution of the aforementioned will be important for the rating, going forward. AIL has initiated its operations with equity brokerage services and earned brokerage revenue of ~PKR 5.7mln in FY21 (SPLY: ~PKR 1mln). At end-Jun’21 the equity of AIL stood at ~PKR 221mln (SPLY: ~PKR 145mln). The increase in equity is attributable to a sizeable revaluation gain of ~PKR 70mln booked in FY21. AIL has a leverage-free capital structure and the Company intends to remain debt-free as per corporate policy.
The ratings would remain dependent on the management’s ability to strengthen the revenue base by augmenting consultancy and advisory services. Retaining market share and sustaining profitability from core operations remain critical. Meanwhile, upholding strong internal controls and diligent monitoring of risks is important.
Amanah Investments Limited is TREC holder of the Pakistan Stock Exchange Limited and was incorporated under the Companies Ordinance 1984 in 2005 as a public unlisted company. The majority of shares are owned by Mr. Abdul Wahab Omar who owns 44.1% of the ownership and acts as the primary sponsor, as well as the CEO of the company. The remaining shares are held by family members of Mr. Abdul Wahab Omar.