PACRA maintains entity rating of TPL Corp at ‘A’

May 21, 2024 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of TPL Corp Limited (PSX: TPL) at "A" for the long term and "A1" for short term with a stable outlook forecast, latest press release issued by PACRA showed.

The rating reflects TPL Corp's diverse pool of investments and its evolving structure as a Holding company. The existing investment portfolio is harmonious with the defined strategic plan.

TPL Trakker Ltd. (TPLT) offers tailored solutions in digital mapping and tracking. During the period, TPL Insurance Ltd (TPLI) achieved a 5% growth in Gross Written Premium (GWP) to PKR 2,108mln, including Window Takaful (WTO).

TPLI's future success relies on adapting to this evolving landscape by embracing technology, diversifying offerings, and navigating industry shifts.

TPL Properties has re-strategized its business model by setting up a REIT Management Company (RMC), as a subsidiary, and making substantial investment in TPL REIT Fund I (proposed size - PKR 80bln, raised till now - Rs18.3bn).

Regarding projects within TPL REIT Fund I, construction has started on One Hoshang, Pakistan's premier LEED Gold residential building, developed by TPL Developments. Sales NOC has been obtained and off-plan sales for the project have begun.

TPL Life Insurance Ltd. (TPL Life) provides complete health and life insurance products. TPL Security Services (TPL Security) provides security solutions, while TPL E-Ventures explores business opportunities and invests in start-ups as well as in Fintech.

To meet financing requirements for its subsidiaries/associated companies and to settle inter-company balances the company raised debt through various financing arrangements.

The company has made the 7th profit payments of Rs128m and Rs134m respectively against the two long-term instruments PP Sukuk (for Rs2.2bn) & PPTFC (for Rs2.3bn), each for 5 years. For the security purpose additional shares of TPLI, TPLP and TPLT are provided against the instruments.

During the year, units of REIT were also pledged. The company, along with Abhi (Private) Limited, is exploring the potential acquisition of a majority shareholding in FINCA Microfinance Bank Limited.

A due diligence exercise is underway, and the decision to proceed will depend on satisfactory outcomes on a standalone basis, TPL Corp has received dividend income PKR 315mln from the interim dividend announced by TPLP.

The company have cooped up from its loss in the recent years. The coverages may improve in the presence of material dividend income.

However, the ratings take comfort from the demonstrated support of sponsors to provide support and raise funds. A strong governance framework remains beneficial for the ratings.

The ratings depend on the projected performance of existing strategic investments.

Any significant delay in materialization of envisaged business strategies to generate funds for the company leading to low return on investments and/or compromised position of the Company to meet its financial obligations will impact the ratings.

“Maintenance of adequate resources for repayment would be crucial,” PACRA added.

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