Press Release

JCR-VIS Assigns Initial Entity Ratings to Arif Habib Equity Private Limited
 

Karachi, December 31, 2018: JCR-VIS Credit Rating Company Limited has assigned initial entity ratings of ‘AA-/A-1’ (Double A Minus/A-One) to Arif Habib Equity Private limited (AHEPL). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘AA-’ signifies high credit quality; protection factors are strong. Risk is moderate but may vary slightly from time to time because of economic conditions. The short term rating of ‘A-1’ signifies high certainty of timely payments; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor.

AHEPL is an investment holding company which aims to acquire interest in group and non-group companies and earn a stream of dividend income along with realized capital gains. Mr. Arif Habib is the majority shareholder of the company holding 99.99% stake. The assigned rating to AHEPL is underpinned by strong financial profile and demonstrated track record of funding support by Company’s major sponsor. JCR-VIS anticipates support from sponsors for AHEPL, if needed.

Investment portfolio of AHEPL is diversified with investments in cement, steel, real-estate, fertilizer and plans of venturing in the power sector. The investment horizon is spread over diverse sectors with the objective to earn consistent dividend stream in some to long-term value accretion in others. In a bid to further augment earning stream and diversify investment base, AHEPL along with Mr. Arif Habib is acquiring 19% stake in Siddiqsons Energy Limited (SEL) which has been incorporated to set up a 330 MW Thar coal fired power plant. Investment in SEL incorporates government guaranteed USD denominated return and is considered low business risk given limited demand risk due to take or pay tariff awarded.

The assigned ratings incorporate AHEPL’s leverage free balance sheet, diversified investment portfolio and sizeable quantum of liquid investments carried on balance sheet. Ratings incorporate management’s commitment to not mobilize any bank borrowings while future funding requirements for new investments or for meeting any contingent liabilities will be undertaken through equity injection. Ratings are constrained by current dividend stream which is expected to witness limited growth from current levels over the rating horizon. Dividend income from SEL (projected to commence from 2022) will provide further stability and support to cash flows.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at 35311861-70 (10 lines) or fax to 35311873.



Jamal Abbas Zaidi
Advisor

Applicable Rating Criteria: Industrial Corporates (May 2016)
http://jcrvis.com.pk/docs/Corporate-Methodology-201605.pdf

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Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited