The Pakistan Credit Rating Agency Limited
27-Dec-19
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Entity Ratings of EFG Hermes Pakistan Limited
| Rating Type | Entity | |
|
Current (27-Dec-19 ) |
Previous (28-Jun-19 ) |
|
| Action | Maintain | Maintain |
| Long Term | A- | A- |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The ratings reflect the Company’s association with an international financial services group, EFG Hermes, and its emerging position in Pakistan’s brokerage industry. The ratings incorporate strong sponsor support, robust governance framework and internal control environment. Direct reporting to respective group heads and centralized research function augurs well for organizational structure. Due to lackluster market performance the profitability of the Company remains depressed. The Company has a modest equity base and leveraged capital structure. Sizable liquid assets and support from parent in the form of guarantees provide comfort to the ratings.
The ratings are dependent on the management's ability to retain its market share and enhance the volumes and diversity of revenue to improve its competitive position in the brokerage industry. Retention of key personnel, improvement in customer servicing tools and maintaining strong controls will remain critical.
About
the Entity
EFG Hermes Pakistan Limited, a public listed company, is licensed under Securities Brokers (Licensing and Operations) Regulations, 2016, as a securities broker and provides securities research and brokerage services to institutional and individual clients. It is also engaged in investment banking activities. The Company is 51% owned by EFG Hermes Frontier Holdings LLC, which is a wholly owned subsidiary of EFG Hermes Holding S.A.E. EFG Hermes has presence in the Middle East and North Africa (MENA) region and specializes in asset management, securities brokering, investment banking, private equity and research. EFG Hermes is the first foreign investment bank and securities broker to have physical presence in Pakistan. The Company operates from its head office based in Karachi, Pakistan.
Mr. Saad Iqbal is CEO of the Company. The Company has fourteen board members, including the CEO, of which four are independent. The board meets on quarterly basis to review the business performance.