JCR-VIS Upgrades Management Quality Rating of HBL Asset Management Limited
Karachi, December 29, 2017 (PPI-OT):JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has upgraded the Management Quality Rating (MQR) of HBL Asset Management Limited (HBL AMC) to ‘AM2+’ (AM-Two Plus) from ‘AM2’ (AM-Two). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 30, 2016.
The rating upgrade derives strength from growth in Assets under Management (AUMs) attributable to acquisition of PICIC Asset Management Company (PICIC AMC), improvement in organizational structure, inductions in management team and improved control framework. Rating also draws comfort from the company’s sponsor profile, HBL Bank being the largest private sector bank of the country. Going forward, financial strength and support of the sponsor will remain one of the key rating drivers. Ratings will also be driven by effective and timely management and servicing of debt obtained for acquisition of PICIC AMC.
As at end-October 2017, AUMs of the AMC amounted to Rs. 57.7b constituting approximately 9% of mutual fund industry. With the recent launch of two new Fund of Funds, HBL AMC is managing a diversified portfolio of a total of 19 funds. HBL AMC has developed a revised marketing strategy for expanding its distribution outreach; three new cities were added to the retail network during 1H17 while three more are expected to be added in near future. This expansion is expected to result in further granularity in its funds’ holdings; the same will be tested over time. HBL AMC’s access to it sponsor’s branch network and resource utilization will also play a vital role in this regard.
The impact on redemptions and profitability following conversion of close end funds to open end funds is a key rating consideration. During the period under review, funds’ performance remained mixed in comparison to peers. With the induction of experienced new team and restructuring, management anticipates performance to improve, going forward.
For more information, contact:
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi