Karachi, December 30, 2016: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has revised Management Quality Rating of Askari Investment Management Limited (AIML) from ‘AM3++’ (AM Three Double Plus) to ‘AM3+’ (AM Three Plus). Outlook on the assigned rating is placed under ‘Rating Watch - Developing’ status. The previous rating action was announced on May 4, 2015.
Ratings of the company take into account the recent public disclosure for intention of sale of AIML by AKBL; negotiations are ongoing with the prospective buyers in this regard. Currently, AIML is a wholly owned subsidiary of Askari Bank Limited (AKBL), belonging to Fauji Foundation Group (better known as Fauji Group).
The company currently manages seven collective investment schemes including two Shari'ah compliant ones. Moreover, the company also manages a limited portfolio for individual clients. Annual growth in AUMs of the company was in line with the growth witnessed in industry as indicated by AIML’s consistent market share of 1.9%. However, after adjusting for associate holding, market share of AIML decreased to 1.6%. With the announcement of intention of sale by the sponsor, AUMs of the AMC declined to Rs. 7.6b (FY16: rS. 8.8b) by end-November 2016.
Returns generated by all the funds have trended downwards during the outgoing year. Barring two funds, performance of rest of the funds ranked less favorably in comparison to peers. In order to improve performance of its equity funds, management has strengthened its equity team; returns generated by equity funds improved in the period ending Nov’16. Given that the company is targeting to increase its retail proportion, for which necessary organizational changes have already been implemented, these funds (especially hybrid and equity based schemes) need to showcase significant improvement in performance.
Organizational structure of the company also improved on the back of a full-fledged research department established. Based on the limited size of operations, several senior executives hold dual roles within the organization. Overall corporate governance framework is supported by adequate board composition and oversight. Directors are yet to receive certification; timeline for compliance with this requirement has been extended till 2018 by the regulator.
For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 201) or the undersigned (Ext: 207) at 35311861-70 or fax to 35311872-3.
Jamal Abbas Zaidi
Applicable Rating Criteria: Asset Management Companies (March 2016)
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