PACRA Assigns Initial Entity Ratings to Abhi (Pvt.) Limited

Abhi (Pvt.) Limited ("Abhi" or the "Company") has emerged into the country's fintech space with a financial wellness platform for individuals and companies. Abhi's focus is to increase financial inclusion in the country through its credit-bridging products. The Company is offering products that are secured against customers' earned revenues. Abhi has raised ~$22.8mln from renowned venture capital funds (VCs) and the co-founder's own investment. As a technologically agile Company, Abhi has built convenience and ease in customers' experience through the mobile application, which translated into a rapid growth proposition for the Company. As part of the business strategy, Abhi does not have any plans to enter into the unsecured lending business. Another product line of Abhi is invoice factoring which is currently a prime revenue earner. Going forward, revenue from a single product line will be kept under 70% of the total operating revenue to reduce the product concentration. Further, Abhi only allows the EWA facility to employees of pre-qualified customers, and concentration risk has been addressed through having a cap of 5% of net equity and sub-ordinated debt for cumulative exposure of all product lines to a single customer. Abhi's total credit exposure stood at ~PKR 4,607mln at end-Jun'22, and going forward Abhi will ensure that the cap of single product-line exposure and sector exposure to 70% and 20% of net-equity and subordinated debt, respectively, is maintained. Further, total credit exposure will be kept under 2x of equity. The Company had an equity base of ~PKR 1,047mln at end-Jun'22, which has since been boosted through further injection by the parent company, standing at ~PKR 2,131mln at end-Aug'22. The Company has expressed the intention to maintain at least PKR 4bln as equity and sub-ordinated debt moving forward. At least 20% of this is to be kept in liquid avenue. A detailed shareholder’s agreement is in place ensuring the long-term commitment of the co-founders and other sponsors. Abhi has an adequate governance structure. The presence of an independent director is well noted, and going forward the Company plans to adhere to the CCG requirements. The holding company’s board has four nominee directors from the major VCs, while two independent directors are also present for added oversight. The management team, comprised of industry professionals, is headed by Mr. Omair Ansari (CEO), an ex-Morgan Stanley portfolio manager, and Mr. Ali Ladhubai (COO), an ex-retail banker, who are also the co-founders behind the Company. Abhi has in place an elaborate risk management framework; board approved policies addressing all facets of the Company. A detailed business plan has been developed to address their short-term and long-term goals, indicating the Company's firm intent on organized growth.
The ratings are dependent upon Abhi's continued adherence to the agreed rating parameters. The Company's ability to sustain their rapid growth and increase their geographical diversification is important. Prudent management of credit risk and continued improvement of control environment remain vital.

About the Entity
Abhi (Pvt.) Limited is a fintech startup with an NBFC license incorporated under the Companies Act, 2017 on April 20, 2021. Their flagship product is Earned Wage Access, while invoice factoring and payroll financing is also available. The Company is 99.99% owned by Abhi Fintech Limited, which in turn is 100% owned by Abhi Limited. Abhi Limited is primarily owned by the co-founders - Mr. Omair Ansari (20.21%) and Mr. Ali Ladhubhai (19.33%) while the remaining shares are owned by renowned VCs.