PACRA Upgrades Asset Manager Rating of AL Habib Asset Management Limited

The ratings reflect AL Habib Asset Management Limited's ("AHAML" or the "Company") prominent position in the asset management industry, supported by i) a structured investment process ii) sound governance structure and iii) proficient and qualified management. The rating incorporates the company's association with well-established large-sized bank which is one of the dominant player in the market. As of the end of Mar'24, the company has witnessed significant growth in market share which stood at 5.5% (SPLY: 3.7%), The enhanced market penetration is majorly contributed by the growth in the fund size of AL Habib Cash Fund, AL Habib Islamic Cash Fund, and AL Habib Money Market Fund. While AHAML is also making efforts to increase penetration in the equity category. AHAML is managing a diverse fund slate of twelve funds across Conventional and Shariah-compliant categories. The AMC follows a risk-averse approach and keeps majority of its exposure in very low-risk avenues i.e. Government securities and other AAA & AA+ rated avenues. The fund performance under the Money & Income category remained in the Top quartile during the trailing 12-months period ending on Mar'24, Funds under the Equity category demonstrated solid performance, standing out with impressive returns and contributing positively to the overall portfolio. The AMC has penetrated well in the retail market ~41% of the total AUM mix is from retail and ~59% from the Corporate market. The retail mix shows the granularity and stickiness of the AUMs. At the end of Mar'24, the average top 10 investors concentration remains at 29% comforting the redemption pressure. While the average related party holdings were 9%.
The consistent support from the Parent, Bank AL Habib Limited has been instrumental in providing stability and mitigating risks. AHAML benefits significantly from this relationship, utilizing the bank's extensive branch network as Sales and Distribution centers. This synergy enhances operational reach and efficiency.
On the financial side, the Company experienced positive growth during the period under review. During 3MCY24, the Company's topline increased by ~166% to PKR 352.4mln (SPLY: PKR 132.4mln). Moreover, the net profit during 3MCY24 increased by ~170% to PKR 190.6mln (SPLY: PKR 70.6mln) on the back of a ~175% rise in management fee and a 22.5 times increase in Capital gain on the sale of Investment. The Company's equity stood at PKR 1.67bln at the end of 3MCY24, comfortably exceeding the regulatory requirement.
Going forward, it will be crucial to grow AUMs, enhance and stabilize market share, and sustain equity to maintain the assigned rating. Strong fund performance, system strengthening, and adherence to a robust investment process are essential.

About the Entity
AHAML incorporated in September 2005 as an unlisted public company, is one of the growing Asset Management and Investment Advisory Company in Pakistan and is licensed by the Securities and Exchange Commission of Pakistan (SECP) to carry out services under the Non-Banking Finance Companies Regulations. The Company is a wholly owned subsidiary of Bank AL Habib Limited. As of Mar'24 the AUMs of the AMC stood at PKR ~132.5bln (SPLY: PKR ~56bln).
The Board of Directors comprises six members. The CEO, Mr. Kashif Rafi, has vast experience expanding over 21 years in the field of Investments and Fund Management. The Company’s diverse product slate includes seven conventional and five shariah compliant funds in open end schemes.