PICIC LAUNCHES FIRST FUND DEDICATED TO ENERGY SECTOR
The fund is being established with a focused objective of capturing the significant return potential of the domestic listed energy sector.
By AMANULLAH BASHAR
Jan 02 - 08, 2006
PICIC Asset Management Company Limited (PICIC AMC) has launched PICIC Energy Fund, which is said to be the first of its kind in Pakistan dedicated to a specific sector. PICIC AMC is a wholly owned subsidiary of Pakistan Industrial Credit and Investment Corporation (PICIC).
It may be mentioned here that PICIC AMC was incorporated in June 2004. Full fledged operations were commenced in July 2004 following the company's acquisition of ICP Mutual Funds Lot B and ICP-SEMF (now PICIC Growth Fund). In the IPO, 25 milion shares are being offered at Rs10 each. The cumulative pre-IPO fund amount stands at Rs750million. There is also a green shoe option for another Rs500million. The public offering was made on December 28-29, 2005 received an overwhelming response from the investors and there were indications that the launch may be oversubscribed.
The offering document mentions that the fund is being established with a focused objective of capturing the significant return potential of the domestic listed energy sector, which comprises four listed sectors namely: Oil & Gas Exploration, Oil & Gas, Marketing, Power Generation, Distribution and Refineries.
By virtue of being dedicated towards the energy sector, the regulators have relaxed certain restrictions applicable to mutual funds in general. For PICIC Energy Fund, the 10% maximum limit for investing in a single security has been relaxed to 15%. The 25% maximum limit for investing in a particular sector has been relaxed to 35%. The relaxation seems logical for considering the fund's focused investment objective. Moreover, it would provide the necessary flexibility in attaining the optimum asset allocation and sector and stock weight ages in the best interest of the fund.
Since inception, the mutual funds managed by PICIC AMC have depicted a sanguine track record. PICIC AMC Ltd. has an authorized capital of Rs5billion and paid-up capital at Rs3billion. PICIC AMC is currently managing two mutual funds, PICIC Investment Fund and PICIC Growth Fund. In FY05 the NAV of PICIC Investment Fund stood at Rs5.883billion, 157% higher as against Rs2.289billion in FY03. For PICIC Growth Fund, the NAV appreciation has been at 121% standing at Rs9.047billion in FY05 compared to Rs4.091billion in FY03.
The PICIC Energy Fund provides convenient investment exposure to Pakistan's energy sector. Within energy, the fund provides diversification opportunities, as investment would be divided amongst the broad spectrum of energy sectors and stocks. With profitability of the fuel and energy sector directly linked to oil prices, it is obvious that this fund would outperform in an environment of rising oil prices. Oil prices depict considerable volatility on a short to medium term basis. In the prevailing market situation, the fuel and energy sector is the most fundamentally attractive. Moreover, the long-term prospects of Pakistan's energy sector, particularly exploration, are positive considering the vast potential for new reservoirs.
The Commissioner, Securities and Exchange Commission of Pakistan (SECP), Rashid I Malik, has said that the Single-Member Company concept introduced by the Commission in July 2005 got a very good response and as many as 2000 companies have so far been taken the shape.
The Commissioner said that the SECP wanted to keep a close liaison with the Lahore Chamber of Commerce and Industry so that maximum number of the businessmen could take advantage of the facilities being introduced by the commission.
He said that the sole object of the SECP is to promote the SME sector, which is the backbone of the economy. He said that the procedure of availability of new name for the company has now been revolutionized and in only one day the person who has established a new company could get a registered name as the number of registration offices in the country has been increased to eight.
Talking about foreign investment, the SECP Commissioner said that Foreign Direct Investments (FDIs) are always encouraged in the larger interests of the country.
Speaking on the occasion, the LCCI President Mian Shafqat Ali appreciated the series of SECP reforms aimed at protecting the interests of the stakeholders in corporate sector.
He said that despite these reforms the powers of big brokers have still not diminished. The big brokers continue to exercise great influence on both market movements and policy development. He said that the SECP should evolve a new methodology so that the interests of investors, especially small ones, could be protected in right manner.
The LCCI President said that the SECP should make some arrangements to give awareness to the corporate sector about the recently notified Voluntary Pension System Rules, 2005 as a big segment is still not fully aware of this system of contributions to pension funds.