The Pakistan Credit Rating Agency Limited
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Muhammad Zain Ayaz

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PACRA Maintains Asset Manager Rating of Alfalah GHP Investment Management Limited

Rating Type Asset Manager
(03-Mar-22 )
(03-Mar-21 )
Action Maintain Maintain
AM Rating AM2+ AM2+
Outlook Stable Stable
Rating Watch - -

The rating reflects the Company’s prominent position in the domestic AMC industry, supported by a structured investment process, sound governance structure, proficient and qualified management, and diversified product slate. The Company has also established its presence in the competitive investment advisory domain, supplementing its revenues. Since Jun'21, the Company's AUMs grew by ~10% stood at ~PKR 60bln at end Dec'21 (Jun’21: ~PKR 55bln). The Company has increased its market share to ~5.7% (Jun'21: ~5.2%), this is due to influx in AUMs of Alfalah GHP Cash Fund as the fund size of the Fund grew by ~20%. The AMC is also strengthening its digital platform for better retail penetration, enhanced customer services and to create synergies with the parent bank. Timely materialization of these initiatives is important. The Company’s product slate is tilted towards fixed income/money market funds. Recently, the Company has also launched ETF to remain competitive with its peers. The funds' performance remained volatile, as most of the funds remain below their respective benchmarks, except for money market and income categories. The equity stood at ~PKR 1.2bln at end Dec'21, which is well above the minimum capital requirement. The rating incorporates the Company's association with Bank Alfalah Limited and potential synergies due to established presence of sponsor banks branch network.
The rating is dependent on the Company’s ability to strengthen its market position along with its peers while sustaining superior fund performance. At the same time, stability in key human resource, structured improvement in risk management framework and success of initiatives to increase retail AUM will remain crucial for the rating.

About the Entity
Alfalah GHP Investment Management Limited was incorporated on October 18, 2004 as an unlisted public limited company and is licensed by the Securities and Exchange Commission of Pakistan to manage open-ended mutual funds and offer investment advisory services. The Company was established as joint venture Non-Banking Finance Company by Bank Alfalah Limited and GHP Arbitrium. The Company provides a wide range of mutual funds and pension funds both in conventional and Shariah compliant category. The Company also provides investment advisory services to the Company’s board of directors comprises seven members including the Chairman. The Company has been in the process of appointing a new chief executive officer for quite sometime. The board is dominated by representatives of MAB Investments and Bank Alfalah Limited. The board has two independent and five non-executive directors. The board members possess strong profile and skills suited to the financial services industry. Assets under management of the Company stood at ~PKR 60bln at end Dec’21 and are spread across fifteen open-end mutual funds and two voluntary pension schemes.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.