Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Stability Rating of 786 Smart Fund (Formerly: Dawood Income Fund)
Rating Type | Stability Rating | |
Current (27-Apr-20 ) |
Previous (28-Oct-19 ) |
|
Action | Maintain | Maintain |
Long Term | AA-(f) | AA-(f) |
Short Term | - | - |
Outlook | Stable | Stable |
Rating Watch | - | - |
The fund's strong credit quality and sound liquidity profile emanates primarily from its mandate to invest in low duration avenues such as cash placements in banks and ensuring low exposure to interest rate risk. At end Dec'19, ~80% of fund's assets were allocated to bank placements, whereas ~16% to Sukuk/TFCs. Average duration of the fund remained within 45 days. At end Dec'19, the Duration of the fund was 31 days. Fund's unit holding pattern is moderately concentrated with top 10 investors representing ~67% of the net assets. This exhibits low redemption pressure.
Going forward, the fund intends to maintain it's current exposure in bank placements and sukuk/TFCs. Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.
About
the Entity
786 Investments Limited is a public listed asset management company and was founded in 1990, Asian Development Bank being its co-sponsor. The Company commenced business operations of venture capital financing in 1993. Later, in 2002, First Dawood Group in partnership with Asian Development Bank converted the company's business operations to asset management. The key shareholders are First Dawood Investment Bank (~15%), Bank of Khyber (~15%), B.R.R. Guardian Modaraba (~13%) and Ms. Tara Uzra Dawood (~12%). The remaining shareholding (~45%) is held by other individuals.
786 Investments has a seven-member board including the CEO, Ms. Tara Uzra Dawood. She holds a Doctorate in judicial science from Harvard Law School. She is on the board of directors of Pakistan State Oil (PSO) and MUFAP and has around 15 years of professional experience in mergers and acquisitions, corporate law and investment management. The other board members comprise four independent directors including Ms. Shafqat Sultana, also the chairperson of the board. She is a professional banker and possesses around four decades of experience in the financial sector. The AUM’s of the Company were ~PKR 550mln at end Dec’19.