Press Release

VIS Assigns Management Quality Rating of ‘AM1’ to Alfalah Asset Management Limited

Karachi, December 29, 2023: VIS Credit Rating Company Limited (VIS) has assigned the initial Management Quality Rating of ‘AM1’ (AM-One) to Alfalah Asset Management Limited (AAML). ‘AM1’ rating denotes excellent management characteristics exhibited by the asset manager.

Headquartered in Karachi, Alfalah Asset Management Limited (‘AAML’ or ‘the AMC’) is backed by MAB Investments Inc. and Bank Alfalah Limited. The overall Asset Management Company (AMC) industry has experienced growth of 28.6% during FY23 while a shift toward money market and income funds was noted during the period across the industry capitalizing on high interest rates prevailing in the market.

The rating takes into account strong growth in Assets under Management (AUM) during the period from June’22 to Sept’23, concurrent with a notable uptick in market share during the period owing to the shift in management strategy. In line with the industry, the AUM of the AMC has experienced a shift towards income and money market funds capitalizing on the high interest rates prevailing in the market. The AMC’s AUMs concentration for the top three funds remains high at 78.0% (June’23: 74.8%; Jun’22: 76.7%). Since the retail proportion of unit holders has increased over the timeline, top ten investor concentration has trended down. Rating also factors in expansion in the client base, Digital platform initiatives, sound Corporate Governance, and Management framework coupled with a well-established IT infrastructure. The assigned rating incorporates strong fund performance with substantial AUM held by funds in the top two quartiles including the top three largest funds in terms of AUMs positioned in the first quartile during FY23.

Despite significant growth in AUMs, the AMC management fees earnings have registered a moderate growth during the review period primarily attributed to the shift towards the money market and income fund categories which attract lower management fees. AAML's financial risk profile is conservative with debtless balance sheet. Going forward, growth in AUMs for increasing market share along with maintenance of fund performance will remain important for the rating.

For further information on this rating announcement, please contact Mr. M. Amin Hamdani (Ext: 217) or the undersigned (Ext: 208) at (021) 35311861-4 or email at info@vis.com.pk.






Syed Asif Ali
Executive Director

Applicable Rating Criteria: Asset Management Companies
https://docs.vis.com.pk/docs/AMC-Methodology-201906.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .