Analyst
Afnan Iqbal
afnan.iqbal_old@pacra.com_old
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Assigns Initial Stability Rating to Alhamra Islamic Money Market Fund (Formerly: MCB Pakistan Frequent Payout Fund)
Rating Type | Stability Rating | |
Current (06-Oct-20 ) |
||
Action | Initial | |
Long Term | AA(f) | |
Short Term | - | |
Outlook | Stable | |
Rating Watch | - |
The assigned rating reflects the fund's strong credit and interest rate risk profile emanating from its investment strategy to invest in adequate credit quality (at least 'AA' and above) and shorter duration investment avenues having sound liquidity. At end Aug'20, the fund had placed ~100% of its assets with an Islamic bank rated 'AA'. As per the investment policy guidelines, the fund shall place minimum 10% of assets in Riba free accounts of Islamic banks/Islamic windows of conventional banks. This is expected to allow the fund to maintain a strong liquidity profile. The weighted average time to maturity of the fund shall not exceed 90 days and the maturity of any single asset shall not exceed 6 months, it limits the funds exposure to interest rate risk. Benchmark return of fund will be the 3-month average deposit rate of 3 'AA' rated Islamic banks/Islamic windows of conventional banks.
Going forward, the fund will invest in accordance with its authorized investment policy, however the current rating depends on appropriate diversification of funds assets. Material changes in the fund's asset allocation strategy, impacting it's credit quality and/or exposure to interest rate risk, would affect the rating.
About
the Entity
MCB-Arif Habib Limited Savings and Investments Limited (MCB-AH or the "Company") is a public listed company, regulated by the SECP. MCB-AH holds licenses for Asset Management, Investment Advisory and Pension Fund Management. MCB-AH was incorporated in 2000 as Arif Habib Investments Limited and subsequently merged with MCB Asset Management Company in 2011, with the objective of achieving synergies in asset management business and access to a wider distribution network. Pursuant to the merger, name of the Company was changed to MCB-Arif Habib Savings and Investments Limited. MCB-AH caters to both conventional and Shariah compliant clientele and is currently managing a diverse product slate of fifteen open end funds and two voluntary pension schemes. MCB-AH is also managing one the largest AUMs under SMA segment and holds significant position in the investment advisory domain.
The major shareholders of MCB-AH are MCB Bank Limited ~51%, Arif Habib Corporation Limited ~30% and Adamjee Insurance Company Limited ~8%. The general public holds remaining ~11% of the shares. MCB-AH's control vests in eight member board of directors, including the CEO. There are four non-executive directors, while three directors are independent. The AUMs (CIS & VPS) of MCB-AH increased to ~PKR 66bln at end Jun'20 (Dec'19: ~PKR 58bln). The AUM's under SMA stood at ~PKR 51bln at end Jun'20.