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The Pakistan Credit Rating Agency Limited

Date
08-Dec-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Ahmed Sheikh
ahmed.sheikh@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Methodology | Securities Broker (Mar 17) [View]

Related Research

  • Sector Study | Brokerage / Securities (Oct 17) [View]
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PACRA Assigns Initial Entity Ratings to Optimus Capital Management (Pvt.) Limited
 Rating Type Entity
Current
(08-Dec-2017-)
 Action Initial
 Long Term A-
 Short Term A2
 Outlook Stable
 Rating Watch -

The ratings of Optimus Capital reflect its well-conceived strategy to keep financial risk low. This mainly emanates from i) prohibition to perform proprietary exposure/trading in stocks ii) debt-free capital structure, and iii) absence of financing to clients along with limited quantum of receivables. The company has long experience in brokerage business from corporate and high net-worth clients, growing market share and adequate risk management systems. Improvement in capitalization and development of advisory services adds support to the ratings. The company has adopted dynamic approach to retain its clientele and build market share. Optimus Capital has a reasonable exposure in the advisory role for large international clients and focuses on enhancing its presence in this segment. The company is focused on technology developments to attract retail clients and further diversify the revenue mix. This initiative is important given relative client concentration in its revenues. Moreover, the company does not offer leveraged products which minimize the credit risk exposure. Accumulation of profits has given sizeable growth to the equity base of the company. Company’s ongoing efforts and focus on compliance and policy framework is appreciated.

The ratings are dependent on the company’s profitability which is inherently volatile due to cyclical downturns. The ratings require the company to diversify and improve its revenue growth. Moreover, retention of key human resources is important. Notably, continuity compliance with financial risk related parameters is critical.
About the Entity
Optimus Capital Management (Pvt.) Limited, incorporated in March 2004, was acquired in June 2011 by the company's current sponsors, Mr. Jawad Amjad and Mr. Asif Qureshi. Optimus is a Corporate Member of the Pakistan Stock Exchange and registered with the Securities & Exchange Commission of Pakistan (SECP) under Brokers & Agents Registration Rules 2001. The company's service offering includes Economic and Investment Research, Equity Brokerage and Corporate Finance & Financial Advisory services. During FY17, the company handled 2% of the ready market transactions.

The two sponsors have over three decades of financial sector experience amongst them with a predominant period in brokerage industry. They have a successful track record of setting up and running brokerage business even in the most challenging stock market conditions. The sponsors have shareholding in Optimus Markets, Zakheera and Energy Consulting.

Company’s board comprises two members Mr. Asif Qureshi and Mr. Mohsin Ahsan. Recently Mr. Jawad Amjad resigned from the position of CEO and Mr. Asif Qureshi is now leading the company as CEO. Mr. Mohsin Ahsan is the Head of Research and have 20 years of experience. Current sponsors are cognizant of concentration in ownership. To this, they intend to build Optimus Capital on the lines of professional financial advisor and equity brokerage service providing firm. They intend to add partners – mainly based on intended professional standing and expected contribution towards business. Discovery of right partner remains imperative.
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.
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