PACRA Maintains Asset Manager Rating of 786 Investments Limited

786 Investments Limited ("786IL" or the "Company") is a public listed company incorporated in Pakistan and is affiliated with the renowned "First Dawood Group," which has a significant presence in the financial market through key entities such as Dawood Hercules Chemicals, Dawood Yamaha, Dawlance, and Descon Engineering. As a listed company, 786IL prioritizes board-level transparency, which supports its rating. In addition to this, an experienced management team and an established organizational framework bode well for the rating. The positive outlook reflects improvements across key performance areas, including investment management, fund performance, and the expansion of its fund slate. In Oct'24, the Company launched a new fund 786 Islamic Money Market Fund to penetrate in the Islamic category, further strengthening its fund slate as an Islamic AMC. Now the Company manages two funds: the 786 Smart Fund and the 786 Islamic Money Market Fund, both of which are classified under the Shariah-compliant Income category and the Shariah-compliant money market category respectively. Further diversification of AUM across different asset classes would enhance the Management Quality assessment. The Company’s average monthly AMUs remain around PKR 1bln, but as of Sep'24, the AUMs stood at PKR 808mln (Sep'23: PKR 719mln). The market share stood at 0.03% as of Sep'24. The Fund’s performance has also shown improvement, with returns exceeding both the industry average and its benchmark. 786IL is also focusing on increasing retail penetration through expanding its distribution network to enhance accessibility, operational efficiency, and customer experience. These efforts are designed to strengthen the Company’s market position and better serve its clients. Sustaining strong fund performance and maintaining credit quality metrics will be essential for the Company’s future rating.
On the financial profile side, the management fee inclined to PKR 4.9mln at the end of Sep'24 (Sep'23: PKR 4.2mln). The profit of the Company increased to PKR ~8.1mln in Sep'24 (Sep'23: PKR ~4.7mln). The profitability has been increased on the back of capital gain on the sale of investment. While the equity of the company stood at PKR ~244mln at the end of Sep'24 (Sep'23: PKR ~246mln) meeting the minimum equity requirement.
The rating is dependent on the materialization of strategy to enhance AUM's and the market position of the Company. Meanwhile, maintaining strong fund performance and diversifying the fund slate is important. Upholding high governance standards and strengthening risk management is crucial for the rating.

About the Entity
The Company's major shareholding vests with the First Dawood Group through First Dawood Investment Bank Limited (15%), Bank of Khyber (15%), B.R.R. Guardian Modaraba (~12.93%) and Miss Tara Uzra Dawood (~18.50%). The remaining shareholding of ~38.57% is held by other individuals and corporate entities. The Company's Board of Directors currently comprises seven board members out of which, four are independent and two are non-executive. The board members have strong educational backgrounds and carry extensive experience. The Chairperson, Mr. Ahmed Salman Munir, possesses more than 30 years of professional experience in the banking industry.