PACRA Assigns Initial Stability Rating to NBP Islamic Fixed Term Munafa Plan-III (Under NBP Islamic Mustahkam Fund)

NBP Islamic Fixed Term Munafa Plan-III (or the Plan) is a moderate risk profile fund. The rating reflects the strength of the Plan's strong credit and interest rate risk profile. The Plan's good credit quality and sound liquidity profile emanate primarily from its mandate to invest in Government Securities and other low-risk avenues. As per the investment policy, the weighted average maturity of the Plan is up to 1 year including but not limited to Bank Deposits with licensed Islamic Banks. The WAM of the plan stood at 357 days as of May'24; exposing the plan to moderate credit risk but it is manageable due to investment in Government Securities and the duration of the plan stood at 249 days as of May'24; exposing the plan to moderate interest risk but it is manageable due to investment in Government Securities. At the end of May'24, ~99.9% of funds assets were allocated to GOP Ijarah Sukuk rated AAA. The Plan's investment in GOP Ijarah Sukuk, which offers a fixed return, is effectively managed to accommodate both the expense ratio and the fixed returns promised to investors. The plan unit holding pattern is highly concentrated with the top 10 investors representing ~71% of the net assets, which exposes the fund 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 individual 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 ~305bln at end-Mar'24, the Company is currently managing a diversified fund slate of twenty six open-end mutual funds, four voluntary pension schemes and one Exchange Traded Fund.