KARACHI: The public subscription of Meezan Balanced Fund (MBF) – a closed end scheme managed by Al Meezan Investment Management Ltd – worth Rs1,200 million is due to commence from December 20 to 23, 2004.
A closed end scheme means a scheme constituted by way of a trust to raise funds through the issuance of certificates to the public for investing in securities including money market instruments for a definite or indefinite period but which does not continuously offer certificates entitling the holder of such certificates to receive on demand his proportionate share of the net assets of the closed end scheme. The MBF has already applied for listing at the Karachi Stock Exchange. The pre-IPO capital of the MBF stands at Rs770 million divided into 77 million certificates of Rs10 each while that made or arranged by MBF’s investment adviser totals Rs130 million divided into 13 million certificates of Rs10 each.
Now, the MBF would seek a public offer of Rs300 million, ie 30 million certificates of Rs10 each divided into the following four categories:
i) 500 certificates of Rs10 each with a face value of Rs5,000, with a reserve allocation of 25 per cent of the issue.
ii) 2,500 certificates of Rs10 each with a face value of Rs25,000, with a reserve allocation of 25 per cent of the issue.
iii) 5,000 certificates of Rs10 each with a face value of Rs50,000, with a reserve allocation of 25 per cent of the issue.
iv) 10,000 certificates of Rs10 each with a face value of Rs100,000, with a reserve allocation of 25 per cent of the issue.
The MBF is a balanced fund. The investment objective of Meezan Balanced Fund is to generate long-term capital as well as current income by creating a balanced portfolio that is invested both in high quality equity securities and Islamic income instruments such as TFCs, COIs, Certificates of Musharika, Islamic Sukuk, ready-future hedges and such other Sharia-compliant instruments.
As per the requirements of the Securities and Exchange Commission of Pakistan (SECP), the Fund shall not at any time:
i) Invest more than 15 per cent of its net assets in any one company or more than 15 per cent of the issued capital of the company, whichever is less.
ii) Invest in one sector as classified by the stock exchanges more than 30 per cent of the Fund’s net assets.
All other rules as are applicable to an Islamic mutual fund shall also apply to the MBF.
A general criticism levelled against mutual funds nowadays is that they keep on issuing right shares and hence negatively affect the interest of their investors.
Accordingly, it has been decided that the Investment Advisor – Al Meezan Investment Management Ltd – may decide to offer Right Certificates to the existing Certificate Holders at a subscription price not higher than the closed end scheme at the close of the business day on the date of announcement of the right issue subject to approval of majority certificate holders in their meeting. Further, the Investment Advisor may convert the Fund into an open end fund with the approval of the certificate holders, trustees and the SECP.