Press Release

JCR-VIS Assigns Initial Entity Ratings to Foundation Securities (Private) Limited

Karachi, November 1, 2017: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has assigned initial entity ratings to Foundation Securities (Private) Limited (FSL) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the assigned ratings is ‘Stable’.

Assigned ratings derive strength from its sponsor profile; majority shareholding of FSL rests with Fauji Foundation. Fauji Foundation is one of the largest business conglomerates in Pakistan with strategic investments in fertilizer, power, cement, infrastructure, banking, financial services, consumer goods, oil & gas and other sectors. FSL is primarily engaged in provision of equity and commodity brokerage, the corporate advisory function may also be activated.

Revenues of FSL emanate largely from equity brokerage. The company has a sizeable online client base and caters to its retail clients through four branches present across Pakistan. Brokerage revenue is also earned from institutional clients including revenue from a foreign brokerage firm. Given the current downward trend of the equity market, FSL may consider diversifying its revenue stream further in order to sustain its top line; the company is focused towards further building its online and foreign client base in this regard.

In financial year 2017, FSL booked a gain on sale of shares held in Pakistan Stock Exchange. This, along with profit retention contributed to augmentation in equity base to Rs. 348.4m at end-June 2017, still remaining lower than peers. Liquidity profile of the company is considered adequate.

Management team comprises professionals with adequate experience in the financial services industry. In June 2017, there was a change at the helm of the organization. Stability of management team is considered essential for achieving long term goals of the company. Governance structure and control environment of FSL may be further strengthened through a more wider and updated policy framework and with induction of an independent director. In view of this, FSL has recently established an independent compliance and risk department.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.

Javed Callea

Applicable Rating Criteria: Methodology - Securities Firms Rating (May 2015)

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 2017 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