Final PR
The Pakistan Credit Rating Agency Limited

Mahina Majid

Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]
  • Correlation between Long-term and Short-term rating (Jun 16) [View]

Related Research

  • Sector Study | Joint Venture Financial Institutions (Jun 17) [View]
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PACRA Maintains Entity Ratings of Pakistan Kuwait Investment Company (Pvt.) Limited
 Rating Type Entity
 Action Maintain
 Long Term AAA
 Short Term A1+
 Outlook Stable
 Rating Watch -

The ratings of Pakistan Kuwait Investment Company (Private) Limited (PKIC) primarily rests on the equal ownership of the company by Government of Pakistan (GoP) through State Bank of Pakistan (SBP) and by Government of Kuwait through Kuwait Investment Authority (KIA). The ratings benefits from the company's strong financial profile emanating from robust risk absorption capacity and sound liquidity. With increasingly competitive environment in the financial sector, Pak Kuwait’s business growth remained constrained. Nonetheless, the company has taken various initiatives in the form of strategic equity investments in different companies aimed at diversifying its revenue stream while maintaining a relatively small advances portfolio. These investments in associated provide a strong and stable income stream in the shape of dividends, hence, increased net profits on YoY basis (89%). Going forward, the management, while continuing to prudently increase its advances book, would focus on non-fund based revenue stream. Given limited depth in participation towards development of long gestation projects, JVFIs largely operate on turf common to commercial banks where limited outreach, low funding base, and high competition remain key challenges for JVFIs.

The ratings are dependent on the management's ability to sustain its financial profile while managing the associated risks as advances increase. Management’s efforts to diversify its operations, finding a new niche for growth, while sustaining its profitability and at the same time upholding governance standards remains critical for the ratings.
About the Entity
Pak Kuwait Investment Company was established in March 1979 as an equally-owned joint venture between the governments of Pakistan (through State Bank of Pakistan) and Kuwait (through Kuwait Investment Authority). The company maintains a strategic investments book in different companies and funds. The earning profile of the company continues to take comfort from its healthy strategic investment portfolio, mainly 30% stake in Meezan Bank Limited that generates stable dividend income.

The BoD, including the Managing Director, comprises six members with equal representation of the joint venture partners. All directors of the company are non-executive with the exception of the MD, Mr. Mansur Khan. He has been associated with Pak Kuwait since Feb-14 and has over 25 years of varied experience in the banking and development sector. Pak Kuwait has an established structure with a relatively stable and experienced management team.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.