Lahore, September 15, 2020 (PPI-OT): AL Habib Asset Management Limited (Formerly: Habib Asset Management Limited) was in the process of transformation with Bank AL Habib acquiring entire shareholding (from 30%) in the Company to make it a wholly owned subsidiary of the bank. The process is now complete with the bank’s acquisition of the remaining 70% stake. The bank has injected fresh capital of PKR 450mln in the Company to meet regulatory requirement and ensure future viability. A new management team is in place now and changes on board of directors are underway.
On the back of these initiatives, the Company has gained significant market share through aggressive growth in AUMs, which stand at PKR 11.6bln in May (Dec 19: 6.9bln). The upgrade in rating reflects the Company’s association with Bank AL Habib, its growing market share, strong governance framework and fortified equity base. The new management team intends to enhance fund slate, while strengthening overall risk management and control processes. The Company’s market share is improving but AUM concentration remains high with tilt towards money market and fixed income funds.
The Company is expected to benefit from access to large branch network of Bank AL Habib and its strong brand name. The overall fund performance remained above the benchmark except for the equity category, which unperformed and has limited size. The profitability of the Company remained under pressure lately but is expected to improve with higher AUMs and sizeable equity injection. The integration of the Company with the bank and cohesion of new management team will determine extend of synergies.
The rating is dependent on the Company’s ability to capitalize on synergies emanating from association with Bank AL Habib through increased market share. Diversification of the fund slate and maintaining strong fund performance will be critical. Strengthening systems and adhering to robust investment process is important.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com