Holding Company Rating Methodology

Analyst Contacts
Momin Farooque momin.farooque@pacra.com
October 2024
The Pakistan Credit Rating Agency
Holding Company Rating Criteria
Methodology
Table of Contents

1. Introduction ...................................... 2
2. Profile................................................ 3
3. Qualitative Factors............................ 4
4. Ownership ........................................ 5
5. Governance....................................... 5
6. Management..................................... 5
7. Investment Strategy .......................... 6
8. Business Risk.................................... 6
9. Financial Risk.................................... 9
   Summary
   PACRA’s methodology documents lay out the umbrella framework guiding its credit ratings. This document provides an overview of PACRA’s approach to assigning credit ratings to holding companies in Pakistan. Holding companies are entities whose primary activity is holding controlling and non-controlling stakes in private or publicly traded companies, for the purpose of generating capital gains and/or dividend income. The need for a separate framework for rating holding companies arises to account for the unique risks emanating from their investment portfolios and impact on their credit quality. While some holding companies’ activities are restricted to holding stakes in investees, others have their own operations as well. This methodology applies to both, while, in the case of the latter, the relevant sector methodology or PACRA’s Corporate Rating Methodology is applied too. Analyst Contacts:
   Zohaib Zafar zohaib.zafar@pacra.com
   +92 42 3586 9504
   The Pakistan Credit Rating Agency:
   Head Office
   FB 1 Awami Complex
   Usman Block, New Garden Town
   Lahore
   Phone: +92 42 3586 9504
   Karachi Office
   169/1, Street No 21.
   Khayaban-e-Qasim, DHA Phase 8
   DHA, Karachi
   Phone: +92 346 2578624
   Disclaimer: PACRA has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. PACRA shall owe no liability whatsoever to any loss or damage caused by or resulting from any error in such information. Contents of PACRA documents may be used, with due care and in the right context, with credit to PACRA. Our reports and ratings constitute opinions, not recommendations to buy or to sell.