The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintains Asset Manager Rating of NBP Fund Management Limited

Rating Type Asset Manager
(22-Jun-23 )
(22-Jun-22 )
Action Maintain Maintain
AM Rating AM1 AM1
Outlook Stable Stable
Rating Watch - -

The rating reflects the NBP Fund Management Limited's ("NBP Fund" or the "AMC") dominant market position as one of the leading players in the asset management industry. The rating takes comfort from a stable & professional management team, a well-defined investment process, a well-developed risk management function, and a strong brand name. Since Jun'22, the AUMs base of the Company mounted significantly by ~32% to PKR 234bln (as of Mar 23), while the industry grew by 21%. Resultantly, the market share increased to 15.2% as of Mar'23 (Jun 22: 14.1%). Overall, AUMs mix is tilted towards the money market and income category. As an investment advisor, the AMC is managing 93 accounts under a discretionary portfolio. Since, Jun'22 AMC has launched multiple plans under the money market and the fixed rate/return category both Islamic and conventional, which have contributed in overall AUMs growth of AMC. The majority of the Funds falling under the money market and income categories remained in the top quartile in trailing 12M since Apr'22. While the performance of the Funds falling under the equity category is majorly attributable to stock market performance and remained in line with peer's fund performance. The clientele mix of the AMC retail : institutional is continuously improving since Mar'22. Resultantly, the investor concentration on the AMC level has also diluted, which added granularity to the overall investor base of the AMC. The AMC is following an aggressive growth strategy by enhancing focus on the digital front to augment retail client penetration. Current applications in use for investor servicing are i) N-Pay ii) Sahulat Sarmaya Kari iii) NBP Fund Digital iv) WhatsApp Self Service v) Debit Cards and vi) Swift Pay. While the AMC is the pioneer in introducing cash management applications (NPay) for corporate client's IBFTs. The AMC is using its own branch network of 29 branches for its operations and has support of NBP branches for its operations.

On the period ended Mar'23, the management fee increased by 29% YoY basis while the AMC remained profitable with PKR 252mln (Mar'22: PKR ~198mln). The equity base of the Company reported at PKR 1,494mln at the end of Mar'23 (Jun'22: PKR ~1,362mln). The capitalization and fee-generation capabilities provide a cushion against market volatility
The rating is dependent on the management’s ability to sustain its market share. Upholding strong organization structure and controls along with retention of key personnel is imperative. Consistent superior fund performance remains imperative for the rating.

About the Entity
NBP Fund Management Limited, established in 2005, is licensed 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%. Baltoro Growth Fund acquired the entire 36% stake of Alexandra Fund Management Private Limited in the company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro has made three investments in the pharmaceutical, renewable energy and financial services sectors. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed holds a 10% stake in the Company. The Company’s nine-member Board of Directors includes three independent directors, five non-executive directors and the CEO. The Company is currently managing twenty nine open ended funds under twelve different categories, three voluntary pension schemes and one 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.