The Pakistan Credit Rating Agency Limited
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Muhammad Azmat Shaheen

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PACRA Upgrades Investment Advisor Rating of BMA Investment Advisors Limited (Formerly BMA Asset Management Company Limited)

Rating Type Investment Advisor Rating
(10-Feb-23 )
(24-Jun-22 )
Action Upgrade Initial
Long Term AM2 (ia) AM3++ (ia)
Short Term - -
Outlook Stable Stable
Rating Watch - -

The assigned rating of BMA Investment Advisors Limited (Formerly BMA Asset Management Company Limited) ("BMA-IA" or the "Company") takes into account the organizational structure changes, adequate governance framework, and good sponsor's profile. Previously, the Company was engaged in providing Fund management services under the Collective Investments Scheme. Now, the Company is acting purely in its capacity as an investment advisor. Specialized investment advisory services have gained popularity in recent years. The assigned rating derives comfort from a well-defined investment process with tools to assess and monitor investment-related risks. Portfolios managed by the Company pertaining to HNWI, corporate clients, and contribution funds. The portfolios managed by the Company have shown sizeable growth by 5x since Jun'21 and ~38% since Jun'22. The total cumulative value of SMAs under the management of the Company has depicted an increasing trend in the period 6MFY23. The rating upgrade takes into account i) The growth over a short span which is attributable to the continued addition of new clients along with the increasing SMA of existing clientele and ii) the quality of reporting to clients which is considered strong with real-time NAVs appearing on the client's dashboard. The composition of the portfolio comprises 95% discretionary and 5% non-discretionary portfolios. While the top ten investor's concentration was standing at an average of ~87% during 6MFY23. Fee-based revenues have depicted a sizeable increase on account of growth in SMAs accounts. Overall portfolio returns were notably better during 6MFY23. Considering the volatility in the stock market the equity portfolio performed in line with the KSE-100 index with the majority of the portfolio investment in blue chip companies' scrips. While the return on the fixed-income portfolio component outperformed the benchmarks. Above-average performance of portfolios under management, both on the equities and fixed income side, is important to the efficacy of investment management processes at BMA-IA. The financial performance of the company has remained at a better level, generating adequate profitability during 6MFY23. While the capitalization levels of the Company are considered sound as the Company has a sizeable cushion over the regulatory limit.
Going forward, the longevity and stickiness of the investors under the SMA portfolio along with consistent performance track record and quality of of client servicing remain imperative for the assigned rating.

About the Entity
BMA Investment Advisors Limited (Formerly BMA Asset Management Company Limited) was incorporated in April 2005 and acquired the license for investment advisory and asset management in April 2005 and July 2005, respectively. Recently, the Company has revoked the license of asset management services under CIS scheme. The Company is a wholly-owned subsidiary of BMA Capital Management Limited. Mr. Mian Qasim Saeed Ahmed joined the Company as CEO in August 2020 and now he is currently working as President of the Company. The Company is now purely operating as an Investment advisor. The Company has a three-member board, all members are non-executive. Mr. Salim Khan is acting as the Chairman of the board since, October 2017. He possesses vast experience in strategic human resource consultancy and organizational development.

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.