Muhammad Azmat Shaheen
PACRA Maintains Debt Instrument Rating of Jahangir Siddiqui & Co. Ltd. | TFC XI | Mar-18
|Rating Type||Debt Instrument|
The rating reflects that Jahangir Siddiqui & Co. Ltd. ('JSCL' or 'the Company') is a strong holding Company in the financial sector with significant investments in various areas. Its portfolio includes banking (JS Bank, BankIslami Pakistan), insurance (EFU Life Assurance and EFU General Insurance), brokerage (JS Global Capital), and asset management (JS Investments). JS Bank is on its path to establish itself as a medium sized bank offering innovative financial services, while BankIslami seeks to expand its presence in the growing Islamic Banking sector. On June 27, 2023, Next Capital (Pvt) Ltd., on behalf of JS Bank, submitted a public offer to acquire 24.9% shares of BankIslami. This acquisition aims to enhance JS Group's financial presence and strengthen its position in the banking sector. JSCL holds a significant stake in EFU General Insurance and EFU Life Assurance and plans to maintain them. JSCL is on its way to diversify its investment portfolio. It has already made significant investments in LPG storage and infrastructure, through its wholly-owned subsidiary, Energy Infrastructure Holding (Pvt.) Ltd. (EIHPL). The investments are predominantly funded by equity. JS Petroleum Ltd is en route to establishing an LPG storage terminal at Port Qasim, Karachi. The Company income stream remained stable with major portion comprised of dividend income received from EFUG and EFUL. This along with other income and investment in derivatives supplements the revenue stream.
The Company has a very strong capital structure with low leveraging of ~8.0% at 1QCY23 (CY22: ~9%), with adequate coverages. During CY23, the Company fully repaid the outstanding principal along with the accrued mark-up against its OTC listed TFC X. The final payment of TFC XI is also expected during the current calendar year.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion amidst the prevailing tough environment. Timely materialization of these initiatives into sustainable ventures is critical. Strong performance of subsidiaries, stable dividends, and effective management of financial profile and liquidity remains important.
JSCL, a successor to the brokerage business started in the early seventies by Mr. Jahangir Siddiqui, was established in 1991 and is listed on the Pakistan Stock Exchange. JSCL, JS Group’s flagship holding company, has a portfolio of investments categorized into a) core investments (subsidiaries), b) strategic investments and c) trading investments. Investments in the financial segment dominate the portfolio with a significant concentration in the banking and insurance sectors. Other investments are in the energy, petroleum, and infrastructure sectors. Justice (R) Agha Rafiq Ahmed Khan is Chairman of the BoD, while, Mr. Asad Nasir heads the Company as CEO.
The Company issued Over-The-Counter Listed, Term Finance Certificates (TFCs) of PKR 1,500mln. The proceeds are being utilized for the expansion of business and other ongoing operations of JSCL. The instrument carried a profit rate of 6MK + 140bps with a tenor of five (5) years (extended to 5.5 years due to deferment). The Company has a right to exercise the call option before the maturity date.