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The Pakistan Credit Rating Agency Limited
Press Release

Date
20-Oct-21

Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Stability Rating of NBP Active Allocation Riba Free Savings Fund

Rating Type Stability Rating
Current
(20-Oct-21)
Previous
(16-Apr-21)
Action Maintain Maintain
Long Term A-(f) A-(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NBP Active Allocation Riba Free Savings Fund (or the "Fund") is a medium risk profile fund. The Fund is mandated by it's Investment Policy to invest in short term Shariah Compliant Bank Deposits and money market/debt securities. At end Jun'21, Bank Deposits constituted 68.6% of the Fund's total assets and were placed with Banks mostly rated 'AAA'. The total credit quality of 'AAA' rated instruments was 66.3% which acts as a substantial indicator towards the low-risk nature of the Fund. Furthermore, 15.5% of the total assets were invested in Islamic Commercial Paper in entities rated 'AA'. Moreover, cash balances placed in Banks were 13.6% of the total assets and were placed in Islamic Banks, ranked 'A+'. The unit holding pattern of the fund is extremely high with top 8 investors contributing 100% of the total Fund's assets. It is easily identifiable that the Fund is subject to a high amount of redemption pressure. The Fund does well to keep its average duration to 16 days at end Jun'21. This limits the Fund's exposure to interest rate risk.
Going forward, the Fund should look to further diversify its unit holding pattern to prevent the redemption pressure from becoming overwhelming. Material Changes in the Fund's asset allocation and/or credit quality will impact the rating.

About the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 168,016mln at end-Jun'21, the Company is currently managing a diversified fund slate of twenty eight open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

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.