Infra Zamin Pakistan Limited

CREDIT RATING REPORT | May-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
02-May-25 AAA A1+ Stable Maintain -
02-May-24 AAA A1+ Stable Maintain -
02-May-23 AAA A1+ Stable Maintain -
02-May-22 AAA A1+ Stable Maintain -
04-May-21 AAA A1+ Stable Initial -
About the Entity

Infra Zamin Pakistan Limited was incorporated on Mar 30, 2020, as a non-bank financial company ("NBFC") domiciled in Pakistan. IZP is co-owned by Private Infrastructure Development Group (PIDG) company InfraCo Asia Investments via Indus Guarantees (60%) and Karandaaz Pakistan (40%). Shareholders have solemnized a Shareholders' Agreement which will determine their relationship among themselves and to the entity itself. IZP's Board of Directors currently constitutes two Indus nominees including the chairman, one Karandaaz nominee, one GuarantCo nominee, two independent directors, and the CEO. Ms. Maheen Rehman, the CEO of IZP, has an experience of 24 years in banking, asset management, and various sectors.

Rating Rationale

InfraZamin Pakistan Limited (IZP) is a for-profit credit enhancement facility established with equity funding from InfraCo Asia Investments and Karandaaz Pakistan. It is part of the Private Infrastructure Development Group (PIDG), a collaboration supported by six governments (the UK, the Netherlands, Switzerland, Australia, Sweden, and Germany) and the IFC. IZP leverages the international infrastructure expertise of InfraCo Asia and GuarantCo, and the local market knowledge of Karandaaz Pakistan, a not-for-profit entity focused on financial inclusion. GuarantCo, rated AAA by PACRA, has extended a contingent capital facility of up to PKR 8.25bln to IZP, enabling the issuance of local currency credit guarantees for infrastructure projects in sectors such as renewable energy, healthcare, transport, and digital communications. As the pioneer in Pakistan’s credit guarantee industry, IZP is committed to improving the creditworthiness of infrastructure projects and contributing to the development of a robust local credit market. IZP takes exposures after a thorough risk assessment process, including internal credit ratings, to ensure soundness and credit viability. To effectively manage credit risk, IZP employs a combination of collateral arrangements including, where necessary sponsors' guarantees and the establishment of Debt Payment Accounts (DPAs) & DSRAs Accounts. These arrangements ensure IZP’s risk coverage in the event of default. In the case of a guarantee call, both the borrower and IZP are entitled to their respective share of the collateral on a pari passu basis. In calendar year 2022 (CY22), IZP provided a guarantee for Multinet Pakistan (Pvt.) Ltd. under a loan facility. This was followed by a guarantee for the Kashf Foundation’s Gender Bond in CY23. In 2024 (CY24), IZP further expanded its portfolio with three new exposures across the food, renewable energy, and digital infrastructure sectors—namely Sunridge Foods Ltd., Acumen Energy Ltd., and Jaffer Business Systems. IZP aims to expand its portfolio in Technical Services and IT Solutions, Renewable Energy, Digital Communications and Infrastructure, Water, Sewage and Sanitation, and Social Infrastructure sector in 2025.
On the financial side, during CY24, the institution's topline increased to PKR 808mln (CY23: PKR 738mln), attributable to inclined income from investments in government securities. The income from business operation has also increased considerably from PKR 26mln in FY23 to PKR 76mln in CY24. Consequently, the net profitability of the institution increased to PKR 233mln (CY23: PKR 230mln). IZP is in the process of developing a business pipeline in the domains of renewable energy, digital infrastructure, transportation, healthcare, social infrastructure, and FMCG.

Key Rating Drivers

The ratings are dependent on the continued support and guidance from the key sponsors. The governance and control mechanics are expected to remain intact in the future. However, the successful maturity of the business pipeline will remain of vital importance.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Infra Zamin Pakistan Limited

rating analysis

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Profile
Structure

Infra Zamin Pakistan (IZP), a for-profit credit enhancement facility company, was incorporated on 30th Mar'20 as a non-bank financial company (“NBFC”) domiciled in Pakistan. The license was issued on 19 February 2021.


Background

A credit enhancement facility is set up to ‘crowd-in’ private sector capital to boost investments in infrastructure and contribute to the development of Pakistan’s financial architecture. The core objective behind setting up IZP is to encourage enhanced financial participation in long-term local currency financings of infrastructure assets.


Operations

IZP's sole line of business will be to issue PKR-denominated unconditional and irrevocable credit guarantees to credit enhance long-term local currency debt, ensuring the timely payment of interest and principal of senior ranking debt instruments backed by infrastructure-related projects.


Ownership
Ownership Structure

IZP is co-owned by Private Infrastructure Development Group (PIDG) company InfraCo Asia Investments via Indus Guarantees (60%) and Karandaaz Pakistan (40%).


Stability

Shareholders have solemnized a Shareholders' Agreement which will determine their relationship among themselves and to the entity itself. Shareholders have a lock-in period, which is pivotal to the development of IZP.


Business Acumen

The business acumen is considered strong as IZP has strong sponsors’ engagement and their experience will go a long way in developing and stabilizing IZP.


Financial Strength

PIDG with consolidated strength of eight members is a donor-financed trust. Although no formal commitment exists, the likelihood of support from the sponsors is high in case of need. GuarantCo is to provide a contingent capital facility of up to PKR 8,250mln to IZP.


Governance
Board Structure

IZP's Board of Directors currently constitutes two Indus nominees including the chairman, one Karandaaz nominee, one GuarantCo nominee, two independent directors, and the CEO. The Board has in place four committees for oversight of responsibilities.


Members’ Profile

The board carries diversified experience including the financial sector, particularly banking, infrastructure development, and other businesses. The majority of the directors have above two decades of experience.


Board Effectiveness

The directors shall hold meetings at least once every calendar quarter at the head office of the Company or such other place as the board may decide. The minutes of the meetings are formally documented.


Financial Transparency

KPMG Taseer Hadi & Co. have been appointed as the External Auditors of the Company for the year CY25. The Auditor is listed in category “A” of the State Bank’s panel of auditors. A.F. Ferguson & Co., Chartered Accountants, a member firm of the PwC network, was the External Auditors of the Company for CY24. They have expressed an unqualified opinion on the financial statements of the Company for the year ended 31st December 2024.


Management
Organizational Structure

IZP is functionally divided into seven main groups, each governed by its respective chief and all reporting to the CEO.


Management Team

Ms. Maheen Rahman assumed the role of CEO of Infra Zamin Pakistan Limited on 1st Jan' 21. The team inlcude highly professional and qualified personals. Mr. Khusro Mumtaz is the CRO and Mr. Moin Iqbal is the CIO of the Company. 


Effectiveness

Currently, there are multiple management committees that are looking at all relevant matters about new Business, Risk & Compliance, Finance, HR, and Administration, as well as any other significant issues /matters for discussion that are to be presented to the board/relevant board sub-committees. As the team size grows the relevant Management Committees will be established as per requirement.


MIS

Comprehensive MIS reports are generated on a prescribed frequency for review by management on regular basis.


Risk Management framework

IZP manages risk through its Governance and Risk Committee, which is responsible for overseeing the implementation of risk management functions and practices. The Committee ensures that the investment and management of capital resources are carried out in a professional and prudent manner. The experience of GuarantCo provides added comfort in the identification and management of implied credit risk. IZP is adopting a set of pre-defined parameters for managing credit, liquidity, and market risk.


Business Risk
Industry Dynamics

Credit Guarantee Institutions (CGIs) facilitate lending by providing credit guarantees against the risk of default of issuers. These guarantees help these entities in raising debt from financial institutions. Thus CGIs are a vital source of financial assistance to these entities. Globally, most CGIs are mandated to promote business, financial markets, and infrastructure development activities mainly in less developed segments.


Relative Position

IZP’s differentiating factor is conceded from direct engagement with the Investors/Lenders in the debt of underlying transactions, leading to a transfer of knowledge on well-structured infrastructure debt, thus creating greater capacity in the infrastructure markets, a greater impact on domestic government policy given the capital commitment to the country by a local entity.


Revenues

IZP’s revenue will flow through various facets. The main operations are the I) ‘Deal Flow’ – the size and number of deals that can be expected to close in each period. IZP is aiming to build a solid pipeline to generate fee revenues. During CY22. The Company issued its first financial guarantee contract under a tripartite agreement with Multinet Pakistan Pvt. Ltd (“Customer”) and HBL (“Lender”) During CY23 the Company issued another guarantee contract to Kashf Foundation. The evenue from these mandates in form of guarantee fee clocked at PKR 75mln during CY24 (CY23: PKR 26mln). During 2024, the Company has taken three new exposures namely—Sunridge Foods Ltd., Acumen Energy Ltd., and Jaffer Business Systems.


Performance

During CY24, the Company’s net markup income covers 78.6% (CY23: 91.9%) of the total income. The core spread of the Company stood at 50.7% (CY23: 26%).


Sustainability

IZP is a local entity, capitalized in-country and partnering with local capital providers, removing cross-border and systemic downgrade risks and thus creating a more robust sustainable, and “future-proofed” structure.


Financial Risk
Credit Risk

Credit risk is managed through a clearly defined risk appetite framework and a comprehensive credit policy and procedure. All credit approvals follow a structured governance process, beginning with a review by the New Business and Submission Committee (NBCC), a subcommittee of the Board. Final approvals are granted by the Board, ensuring robust oversight and control over credit transactions.


Market Risk

IZP have a very conservative policy concerning the investment of its funded capital. Unlike banks, a credit guarantor does not use its capital to make illiquid loans to individuals or corporates, etc. but rather invests its funds in highly liquid short-term instruments, which can easily be sold in the open market. During CY24, the government securities/ investment was 53.9% (CY23: 54.8%).


Liquidity and Funding

The initial cash capital is being invested in low-risk and highly liquid investment options. IZP does not primarily rely on deposits for lending purposes, as funding requirements are being fulfilled by shareholders.


Capitalization

IZP is funded with PKR 4,125mln equity capital from PIDG company InfraCo Asia Investments and Karandaaz Pakistan, provided by the United Kingdom’s Foreign, Commonwealth, and Development Office (FCDO), and an initial matching Contingent Capital Facility (CCF) of PKR 4,125mln from GuarantCo. The shareholder's equity should increase by way of fresh equity injection and/or earnings growth, and the amount of the CCF available will increase on a matching basis up to a maximum of PKR 8,250mln from GuarantCo.
 
 

May-25

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Infra Zamin Pakistan Limited

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
Audited Audited Audited
A. BALANCE SHEET
1. Total Finances - net 160 135 64
2. Investments 4,397 4,299 4,096
3. Other Earning Assets 0 0 0
4. Non-Earning Assets 166 55 51
5. Non-Performing Finances-net 0 0 0
Total Assets 4,723 4,490 4,212
6. Deposits 0 0 0
7. Borrowings 66 0 0
8. Other Liabilities (Non-Interest Bearing) 196 261 214
Total Liabilities 262 261 214
Equity 4,461 4,228 3,998
B. INCOME STATEMENT
1. Mark Up Earned 635 678 480
2. Mark Up Expensed 0 0 0
3. Non Mark Up Income 173 60 19
Total Income 808 738 500
4. Non-Mark Up Expenses (457) (390) (290)
5. Provisions/Write offs/Reversals 0 0 0
Pre-Tax Profit 351 348 209
6. Taxes (118) (119) (81)
Profit After Tax 233 230 129
C. RATIO ANALYSIS
1. Cost Structure
Net Mark Up Income / Avg. Assets 13.8% 15.6% 11.6%
Non-Mark Up Expenses / Total Income 56.6% 52.8% 58.1%
ROE 5.4% 5.6% 3.3%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 94.5% 94.2% 94.9%
Capital Adequacy Ratio N/A N/A N/A
3. Funding & Liquidity
Liquid Assets / (Deposits + Borrowings Net of Repo) 6649.5% 55.0% 55.0%
(Advances + Net Non-Performing Advances) / Deposits N/A N/A N/A
4. Credit Risk
Non-Performing Advances / Gross Advances 0.0% 0.0% 0.0%
Non-Performing Finances-net / Equity 0.0% 0.0% 0.0%

May-25

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Infra Zamin Pakistan Limited

rating scale

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May-25

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Infra Zamin Pakistan Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

May-25

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