The Pakistan Credit Rating Agency Limited
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Muhammad Atif Chaudhry

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PACRA Maintains Asset Manager Rating of First Capital Investments Limited

Rating Type Asset Manager
(05-Apr-23 )
(05-Apr-22 )
Action Maintain Maintain
AM Rating AM4++ AM4++
Outlook Stable Stable
Rating Watch - -

The rating reflects the Company's modest market share, adequate organizational structure and limited fund slate comprising a single fund. The Company has a stable core management team, which provides support to the rating. Since Dec'20, the Company's AUMs have witnessed a declining trend of 16% and stood at PKR 92mln at end Dec'22. The Fund's performance remained subdued based on 12 months' rolling returns. The rating is constrained by a relatively small market share (<1%) and a high concentration in investor base. Top 10 investors constitute ~91% of total AUMs. The related party concentration is ~75% of the total investors, reducing the redemption pressure. The Company has reported a net loss of PKR ~3mln during 6MFY23 (FY22: Loss of ~PKR 34mln, FY21: Profit of ~PKR 31mln). This is due to mainly loss incurred by Company's investment in their own equity fund. Due to dwindling stock market performance the equity of the Company remained under pressure. Currently, the equity is standing at PKR ~200mln at the end of Dec'22 (FY22: PKR ~201mln, FY21: PKR ~216mln). Going forward, the Company has also planned for expansion of revenue streams.
The rating is dependent on sustainable cash flows and profits which would ultimately results in stable equity. The Company’s ability to successfully execute its business strategy and achieve optimal utilization of its resources while leveraging group synergies remains imperative. Meanwhile, improving market share, maintaining strong fund performance, strengthening of core process and meeting the regulatory thresholds would remain critical.

About the Entity
First Capital Investments Limited or the 'Company' or 'FCIL' was registered as a Private Limited by shares, incorporated under the Companies Act, 2017 ("the Act"), on October 27, 1994. FCIL has commenced operations in 1995. The Company is sponsored by First Capital Securities Corporation Limited (FCSC) the holding company of First Capital group with 78.85% shareholding. Mr. Sulaiman Ahmed Said AlHoqani - An Omani Investor - holds a strategic stake of 9.2% in FCIL and major shareholding in FCSC. FCIL is currently managing one open-end, equity fund namely First Capital Mutual Fund (FCMF) with assets under management of PKR 92mln at end Dec'22. The Board of Directors comprises four members, including the CEO Mr. Imran Hafeez. The remaining three members including the chairman, are non-executive, and heads the Investment, HR and Audit Committees.

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.