PACRA upgrades the Asset Manager Rating of Atlas Asset Management Limited

The rating upgrade of Atlas Asset Management Limited ("AAML" or the "Company") highlights the sustainability of its management, strong human resource retention, diverse product offerings, extensive branch network, and growing momentum in AUM base. It also reflects the acquisition of two new business licenses: Private Fund Management and REIT Management. The Company's strong presence in pension funds, holding an 8% market share and its position as the 4th largest in the equity category further support the assigned rating. Strong ownership and a robust governance profile play a critical role in ensuring quality management. These factors collectively contribute to the Company's strong growth momentum in AUMs. As a result, AUMs grew significantly by ~44%, reaching PKR 102bln by October 2024, capturing a 3% market share. The fresh inflows is majorly driven by Atlas Income Fund and Atlas Sovereign Fund. Additionally, funds managed through REIT, advisory, and private equity contributed ~PKR 15bln. The investment decision-making process is well-structured, emphasizing research-based strategies, which is reflected in the funds' superior performance. Notably, all funds outperformed their benchmarks, with nearly 40% ranking in the top quartile. Sustaining the fund performance across all categories along with maintenance of credit quality metrics will remain important for rating, going forward. The management is also focusing on enhancing customer services and improving its digital platform for better retail penetration. The Retail AUMs in relation to total AUMs stayed intact. The AUMs mix of the AMC depicts a good mix of equity category and Income/money market category i.e 27% and 73% respectively. While top-10 investor concentration remains on the higher side~80-90%, dilution in the concentration would be encouraged going forward.
On the earnings front, the Company reported a substantial ~59% increase in revenue, driven by higher management fees, advisory fees, and private equity fees. Supported by rising core revenues, realized and unrealized investment gains, and dividend income, profitability grew 1.3 times, reaching PKR 420mln (FY23: PKR 178mln). The Company's equity stood at PKR 1.7bln as of Jun'24 (SPLY: PKR 1.1bln).
The rating depends on the Company’s ability to strengthen its market position regarding AUMs, sustain superior fund performance, and uphold good governance and organizational structure. While Improvement in investor granularity would remain imperative. Penetration through digital channels would bodes well.

About the Entity
AAML, incorporated in August 2002, is a wholly owned subsidiary of Shirazi Investments (Pvt.) Limited – the holding company of Atlas Group. Atlas Group, founded in 1962 with the establishment of Shirazi Investments, is a diversified group with having presence in manufacturing, power, financial services, and trading. The Company’s seven-member Board of Directors comprises five representatives of Atlas Group including the CEO, the other two are independent directors. Mr. Iftikhar H. Shirazi serves as the Chairman of the Board of Directors of AAML along with several other companies of the Group. The Board has three committees to provide oversight on the Company’s affairs: 1) Audit Committee, 2) Human Resource & Remuneration Committee, and 3) Investment Committee.