September 12, 2019: Pakistan Credit Rating Agency (PACRA) has assigned initial asset management rating of ‘AM4++’ to BMA Asset Management Company Limited, while the outlook forecasted on the rating is ‘stable’.
As per an official press release by the agency on this occasion, the rating reflects the company's decreasing market share and limited fund slate, eroding equity base due to operational losses, and absence of key management personnel.
The Company's AUMs have witnessed significant reduction till Aug-2019 resulting in very small market share of only 0.1%. The equity of the Company has come under pressure due to losses and currently stands at PKR 200mln (as at end-June 2019). , which is the minimum regulatory requirement for an Asset Management Company. Any further erosion in equity will lead to regulatory non-compliance.
The Company also offers Investment Advisory Services and needs additional PKR 30mln equity to fulfill this requirement. The performance of the funds remained below the peer average in FY19. The investor concentration remains high (top ten investors: 94%), making the company vulnerable to redemption pressure.
The rating is dependent on operational and financial viability of the company and timely fulfillment of minimum regulatory equity requirement through equity injection from sponsors. Growth in AUMs, achieving sustainable profitability, improvement in organizational structure and timely hiring of key individuals remain imperative for the rating.