Press Release

VIS reaffirmed Entity Ratings of LSE Financial Services Limited on ‘Rating Watch-Developing’

Karachi, March 08, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of LSE Financial Services Limited (LSEFSL) at ‘A/A-1’ (Single A/A-One) with ‘Rating Watch-Developing’. The medium to long-term rating of ‘A’ denotes good credit quality with adequate protection factors. Moreover, the risk factors may vary with possible changes in economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment coupled with excellent liquidity factors and supported by good fundamentals protection factors. The previous rating action was announced on February 14, 2023.

LSEFSL was created after ceasing its stock exchange operations on January 11, 2016, subsequent to notification by Securities and Exchange Commission of Pakistan (SECP), directing integration of the stock exchanges in Pakistan. Consequently, the Company was granted a license to operate as an Investment Finance Services Company under the Non-Banking Financial Company (NBFC) license issued by SECP under the name of “LSE Financial Services Limited”. In accordance with Section 28b of NBFC rules, LSEFSL was granted an exemption by SECP for three years to comply with the regulation to invest at least 70% of total assets in financing activities, which has expired.

Last year, LSEFSL completed the Scheme of Compromises, Arrangement and Reconstruction for Amalgamation / Demerger/Split under which LSEFSL has been demerged with and into LSE Ventures Limited (LSEVL) and LSE Proptech Limited (LSEPL). The second part of the demerger, involved the Amalgamation/ Merger of Data Textiles Limited, a public listed company with and into the newly created subsidiaries of LSEFSL, eventually converting LSEVL and LSEPL into listed entities. LSEFSL is now a 100% owned subsidiary of LSEVL. With this demerger, all rental and dividend revenue generating assets have been transferred out of LSEFSL to LSEPL and LSEVL respectively, which has reduced the capital base of the Company and limited revenues primarily through to Margin Trading and Fund Management operations.

Continuation of ‘Rating Watch –Developing’ is based on the new Scheme of Compromises, Arrangement and Reconstruction of Amalgamation /Merger approved by the Board in Nov 2023 and subsequently by the General Body in Dec’23, which is currently in process of regulatory approvals. This proposed merger includes LSE Capital Limited (LSECAP), Modaraba Al-Mali (MODAM), LSEPL, and LSEFSL itself. This scheme consists of two parts: (1) the complete transfer of assets and undertakings of MODAM and LSEPL into LSECAP. (2) The partial transfer of designated assets including the listing status from LSECAP into LSEFSL. Since this will impact LSEFSL's balance sheet and revenue streams, the Company continues to be on ‘Rating –Watch Developing’. Ratings will be reviewed once the proposed scheme is completed.

For further information on this rating announcement, please contact at 021-35311861-64 or email at

Applicable Rating Criteria: Non-Bank Financial Companies
VIS Rating Scale

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