Press Release

VIS Assigns Preliminary Broker Fiduciary Rating to SOS Capital Limited

Karachi, June 04, 2024: VIS Credit Rating Company Ltd. (VIS) has assigned preliminary Broker Fiduciary Rating of ‘BFR3 (plim)’ to SOS Capital Limited (SOS). The assigned rating denotes good fiduciary standards and signifies sound ownership and governance while internal controls and regulatory compliance, management and client services as well as business and financial sustainability are adequate. Assignment of final rating is dependent upon grant of desired license by SECP with the same conditions as applicable to other players and assessment of progress achieved on the business plan provided. Outlook on the assigned rating is ‘Stable’.

SOS Capital Limited was incorporated on April 17, 2024, under the Companies Act 2017 for the purpose of conducting equity brokerage business. For the same the Company is in the process of obtaining Trading & Self Clearing license from Securities & Exchange Commission of Pakistan (SECP), for which a BFR rating is a prerequisite as per the regulations. Hence, preliminary ratings are being assigned based on the business plan of the Company and are therefore underpinned by the achievement of the same, going forward.

The Company is owned by Mr. Kanwar Muhammad Tariq and family, who leads the SOS Capital Pakistan group, which spans across multiple sectors including energy, petroleum, and hospitality, with security guard services being their flagship. The Board comprises of four directors from the sponsoring family and one independent director. Strengthening the governance framework by increasing the representation of independent, certified, and qualified directors may enhance Board effectiveness.

Amidst high business risk and competitive environment, the Company aims to achieve strong revenue growth by June 2025 through its brokerage operations, with future plans to expand into margin financing, Corporate Finance & Advisory, Money Market, and Commodities. Maintaining a competitive cost-to-income ratio and considering revenue diversification will be crucial. Given the Company's low equity base, keeping gearing and leverage metrics low is essential. Ensuring adequate liquidity, minimizing market risk exposure, and adhering to best practices in financial statement disclosures, overseen by auditors Reanda Haroon Zakaria & Company, will be key rating sensitivities. Assigned rating is underpinned on Company on establishing a robust web-based platform to enhance client experience, ensuring comprehensive disclosures of policies and procedures. Effective client communication channels must be in place, aligning with best practices. A thorough Risk Disclosure document needs to be developed and signed by all clients. Conducting research reports for client support, and finalizing, and testing a business continuity plan, and maintaining IT systems with adequate backup arrangements are crucial for sustaining high-quality client services. Rating incorporates the development of comprehensive internal policies in line with best practices. The internal audit and compliance functions may be segregated, and a dedicated risk management function established for strengthening of internal control framework.

For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.


Applicable Rating Criteria: Broker Fiduciary Ratings:
https://docs.vis.com.pk/Methodologies%202024/Broker-Fiduciary-Rating.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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .