The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Assigns Initial Entity Ratings to Prism Energy (Pvt.) Limited

Rating Type Entity
(17-Nov-23 )
Action Initial
Long Term A+
Short Term A1
Outlook Stable
Rating Watch -

InfraCo Asia has growing presence as the leading company for projecting investments in renewable/solar in emerging economies. The Company through its subsidiary InfraCo Pakistan, initiated its solar renewable energy division by the name of 'Prism Energy to contribute to sustainable energy mix in Pakistan. The Ratings draw comfort from the explicit support provided by the sponsors in terms of equity financing for all operating and two expansionary projects. Prism Energy (the Company) was incorporated in 2019 with a clear focus on providing solar energy solutions. The Company successfully installed three projects in the first year and four projects in the second year of operations with a cumulative capacity of approximately 9MW. Going forward, two projects are under construction. Its business model consists of signing long-term agreements for sale of solar equipment and O&M services with the clients. Installed project cost is received from the customer over a period of 15 years through an agreed tariff consisting of equipment and O&M component. The Company has recently signed two EPC Contracts with Zero Carbon for installation of 2.7MWP projects on a number of sites. All of the projects are 100% equity funded. Moreover, sponsor's have injected equity required to completely fund two expansionary projects.
The Company's topline is mainly driven from Commercial and Industrial sector. During FY23, the Company’s topline is recorded to be PKR 63mln (FY22: 21mln) whereas its bottom-line is negative standing at PKR (73)mln (FY22: (80)mln). Gross margins are recorded to be 88% (FY21: 91%) whereas FCFOs are also red standing at PKR (74)mln (FY22: PKR (80)mln). Going forward, topline is expected to be improved with increasing projects. Positive financial position of the Company is depicted by strong cash position. The implementation of IFRS-16, which mandates the recording of all leased assets and related liabilities originating from lease transactions on the books, is also taken into consideration in assigning ratings; nonetheless, this magnified position has no impact on the Company's projected financial health.
The ratings incorporate sponsors’ confidence about the soundness of investment strategy in Alternative and Renewable Energy (ARE) especially in solar business as it is completely aligned with Government’s policy to promote renewables in Pakistan. The assigned ratings derive impeccable and well-documented support from the ultimate parentage of the Company: InfraCo Asia. It has given a significant boost to the derived ratings on a standalone basis. Moreover, equity injection into the Company assures confidence of the sponsors into the venture. However, the Ratings remain dependent on the management's ability to sustain low risk profile. At the same time, maintaining strong financial profile and liquidity remains critical. Any significant decrease in margins and/or coverages will impact the Ratings.

About the Entity
Prism Energy is a joint venture of InfraCo Pakistan and Albario Engineering Private Ltd. (AEPL). InfraCo Asia is a commercially managed infrastructure development and investment company headquartered in Singapore. InfraCo Asia is funded by four sovereigns (the governments of UK, Swiss, Australian and The Netherlands). AEPL is a One-Window Solution Provider in the fields of Energy, Industrial Solutions and Infrastructure. With expertise in the solar sector, Prism Energy provides multiple turnkey solutions to cater to customer needs by understanding your requirements and proposing tailor made solutions. Board comprise of five members; three representing InfraCo Pakistan and two representing Albario Engineering. Mr. Arooj Asghar is CEO of the Company, who is supported by a team of qualified professionals.

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.