The Pakistan Credit Rating Agency Limited
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Wajeeha Asghar

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PACRA Maintains Asset Manager Rating of Al Meezan Investment Management Limited

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

Al Meezan Investment Management Limited’s ("Al Meezan" or the "Company") rating reflects the Company’s established standing as the largest asset manager and its competitive advantage as the first and the largest Shariah-Compliant Asset Manager in Pakistan. This rating reflects the Company's strong brand reputation, diversified fund portfolio, robust governance framework, structured investment processes, and qualified management team. To strengthen its control environment, the Company has segregated its Compliance and Audit functions. Since Jun'20 the AMC has grown up significantly by ~83% in terms of AUMs, while ~40% is the contribution from the new funds i) Meezan Daily Dividend Income Fund and ii) Meezan Paaidaar Munafa plan under the Fixed Term Fund. The Meezan Bank has contributed a major support in the inflow of AUMs over the period, ~30% of the total current AUMs are brought by the Bank. The market share of the Company has experienced a slight decrease as the market grew up at a faster pace of ~98% since Jun'20. However, the Company is catching up with its market share at full tilt and currently standing at 18.0% (Jun'22: 15.5%). The AMC has penetrated well in the retail market ~65% of the total AUMs mix is from retail, the highest in the industry. Such a high retail mix shows the granularity and stickiness of the AUMs. Al Meezan is managing a diverse fund slate of twenty funds across nine different Shariah-compliant categories, including a voluntary pension scheme and is the only AMC in the industry that is offering commodity-based fund/VPS Plan i.e. Meezan Gold Fund and MTPF-Gold Sub Fund. Among Money Market and Income category, around ~32% of the Fund remained in top quartile during trailing 12M starting from Apr'20. While Funds falling under Equity category performed in line with industry and stock market performance.
On the financial side, the Company experienced positive growth during the period under review. During 9MFY23, the Company's topline increased by ~12% to PKR 1,320mln (SPLY: PKR 1,177mln). Moreover, the net profit during 9MFY23 increased by ~15% to PKR 571mln (SPLY: PKR 495mln). The Company's equity stood at PKR 3,469mln at end 9MFY23, comfortably exceeding the regulatory requirement.
The rating is dependent upon the Company's ability to sustain its market share and uphold strong investment processes. Any sustained downturn in fund performance and/or significant loss in market share will impact the rating.

About the Entity
Al Meezan Investment Management Limited, established in 1995, is licensed by the SECP to carry out asset management and investment advisory business. The Company changed its status to a public unlisted company from private limited in 2001. Meezan Bank Limited is the largest shareholder of the Company with a stake of 65%, followed by Pakistan Kuwait Investment Company Limited with 30% shareholding. The CEO, Mr. Mohammad Shoaib, CFA, holds 4.85% stake in the Company. The Company's board is composed of ten members including the CEO, with representation of four members from Meezan Bank, two representatives of Pak Kuwait Investment Company Limited and three independent directors. The AUMs of the Company stood at PKR 269bln at the end Mar'23.

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.