Pakistan to see its first digital wealth management company with launch of Mahaana

KARACHI: Pakistan will see its first digital wealth management company after Mahaana Wealth announced it has secured regulatory approvals from the Securities and Exchange Commission of Pakistan (SECP) to introduce technology-led investment management in the country, according to a statement released on Tuesday.

Backed by Mattias Martinsson, co-founder of Swedish fund manager Tundra Fonder, and other international investors, Mahaana Wealth also recently closed a $2.1-million pre-seed round, which will contribute directly to meeting regulatory capital requirements, the company stated.

The round was led by Sweden’s Vostok Emerging Finance (VEF), SparkLabs – a startup accelerator affiliated with SparkLabs Global Ventures – and Pakistan’s IGI Insurance.

“In a country where more than 50% of the population is under debt and spends 30% of their monthly income on repaying debt, the company sees opportunities for every person in Pakistan to create a financial security net in the form of building their savings and retirement funds,” Muhammad Shamoon Tariq, founder/CEO of Mahaana and ex-partner at Tundra Fonder where he currently has significant shareholding, was quoted as saying.

“It’s heartening to see the SECP proactively bringing the required policy reforms and introducing new licence categories, such as digital Asset Management and digital Investment Advisors, to get away with the regulatory bottlenecks restricting individual retirement and saving accounts, and we are glad we were part of the consultations and now geared up to turn that into reality.”

Through stimulating private savings now, Pakistan can make sure that the state is not overwhelmed 30 years from now when the youth of today retire: Mattias Martinsson, co-founder of Tundra Fonder

Pakistan is home to over 220 million people with an employed labour force of 67.25 million, according to statistics published in the latest Economic Survey 2021-22. Its gross savings ratio, however, stands at around 13% of GDP, compared to the global average of nearly 26%, data from World Bank shows, while its investor-base stands at around 250,000.

Mahaana said its mission is to leverage the latest financial technology to create a platform to onboard the working group in Pakistan.

“Pakistan lags significantly behind in individual savings rate and has a base of roughly only 250k individual investors (0.02% population penetration) compared to 6mn in Sweden (60% penetration),” the statement added.

Martinsson said Pakistan has a “great opportunity right now that it needs to take advantage of”.

“Through stimulating private savings now, Pakistan can make sure that the state is not overwhelmed 30 years from now when the youth of today retire,” he said.

In a separate statement to Business Recorder, Martinsson added that Pakistan’s equity market has given investors an annual return of 9.5% in USD over the last 20 years.

"That is attractive. Every person, especially the youth, should have an investment account for the long term. Even if it is small.

"A key problem in Pakistan has, however, been trust. For me that is the first question I ask myself before investing with anyone. And I hope this will be Mahaana’s key long-term competitive advantage. That is why I invested in the company. I hope the company in ten years is known primarily because it improved the financial landscape and provided good long-term savings products," he said in response to a question on Pakistan's savings and investment environment.

David Nangle, CEO of VEF, said Mahaana is addressing one of the most important long-term financial issues that exists in Pakistan today.

“We are proud to back Shamoon and his team in this scale venture and that Mahaana’s success will be a positive for both the users of its platform and Pakistan as a whole,” David was quoted as saying in the statement.

Mahaana is a licensed Non-Banking Financial Company (NBFC) by SECP and is allowed to offer investment management services in Pakistan.

Its CEO, Tariq, held a AAA rating while at Tundra and was one of the fund managers of Tundra Sustainable Frontier Fund.