The Pakistan Credit Rating Agency Limited
09-Apr-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintain Stability Rating of NBP Income Opportunity Fund
| Rating Type | Stability Rating | |
|
Current (09-Apr-24 ) |
Previous (13-Oct-23 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Income Opportunity Fund (or the Fund) is a moderate-risk profile fund. The investment objective of the Fund is to seek maximum possible preservation of capital and a reasonable rate of return via investing primarily in money market & debt securities having good credit rating and liquidity. The Fund had invested ~54% in PIBs & T-Bills, ~22.6% in bank deposits, placements & other banking instruments in AA category, ~14.6% in TFC/Sukuks in AA category and remaining in others at the end Dec’23. The duration of the Fund stood at 34 days at the end Dec’23, limiting the interest rate risk. Whereas the WAM of the Fund stood at 203 days at the end Dec’23, exposing high credit risk. However, credit risk are high due to investment in long term securities such as Sukuks and PIBs. The unit holding pattern of the Fund was ~63.81% at the end Dec'23 representing top ten investor concentration, giving rise to high level of redemption pressure.
Going forward, any material changes in the investment policy and/or compliance with the rating criteria for the assigned rating would have an impact on the ratings.
About
the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (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%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR ~268bln at end-Dec'23, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.