ICRA Nepal has reaffirmed FMQR of [ICRANP] AMC Quality 3 (AMC 3; pronounced ICRA NP Asset Management Company Quality Three) assigned to NIC Asia Capital Limited (NICAC or the company). The rating indicates adequate assurance on management quality. ICRA Nepal’s opinion is not a comment on statutory compliance, financial performance or future performance of schemes managed by the Asset Management Company.
- Ownership profile
- Experienced fund supervisors and management team
- Healthy fund performance so far
- Regulatory focus on capital market could usher in positive developments
- Limited track record in fund management
- Challenges in operating open-ended fund given the shallow debt-market
- Limited diversification avenues and hedging tools in the capital market result in portfolio concentration risks
- Evolving mutual fund industry and low investor attraction
About the company
NIC Asia Capital Limited was incorporated in 2016 as a wholly owned subsidiary of NIC Asia Bank Limited. The company is licensed by the Securities Board of Nepal to work as an investment banker (including services as mutual fund, private placement, portfolio management) and as a merchant banker (including services as issue management, depository participant, registrar to share (RTS) and underwriting services). NICAC has obtained a depository participant’s licence in addition to the fund manager’s licence from SEBON.
As of mid-January 2020, NICAC is managing two mutual fund schemes viz. NIC Asia Growth Fund with a corpus of NPR 835 million (NAV of NPR 10.72) and NIC Asia Balanced fund with a corpus of NPR 755 million (NAV of NPR 10.47). NICAC reported a net profit of ~NPR 21 million for FY2019 (~36% YoY growth) over an asset base of NPR 246 million as of midJuly 2019.