ICB to issue $300m bond in int’l market

The Investment Corporation of Bangladesh (ICB), a listed entity, will raise $300 million by issuing a bond from the international market.

The government cleared the ICB’s proposal, according to a notice issued by the Finance Division under the Finance Ministry last week.

The state-owned financial institution will utilise the fund to bolster its investment capacity, the tenure of the bond will be a five-year and its interest rate will not be more than 3.5 per cent.

However, the government tagged a condition that the ICB will have to make a fresh investment of at least 50 per cent of the raised fund.

The fund will have to be used as the hedging instruments to reduce the risks related to the foreign exchange rate, if necessary, said the notice.

The government will not guarantee the bond in any case for any reason, it added.

Stock market analyst Professor Abu Ahmed said the government institution had earlier parked their deposits with the ICB at 11-12 per cent interest rates, which are significantly lower.

The fund to be raised through the bond from the international market will definitely make the market stronger once the fund is properly used, he said.

“But the most important task needs to be done before raising the fund is to reform the entity,” said Ahmed.

“The government was really worried over the ICB’s current performance as it so far failed to support the capital market efficiently. However, we’re still trying our level-best to fix the organisation,” BSEC Chairman Shibli Rubaiyat-ul Islam told The Business Post.

The government entity, which mainly relies heavily on high-cost borrowing, would mainly utilise the proceeds to offer margin loans at a low cost to the market intermediaries, said an ICB official.

The raised fund will also be used for the loan repayment, he said.

Formed in 1976, ICB was entrusted with the task of making the share market dynamic, but instead it has been continuously showing poor performance.

The role of ICB often comes under scrutiny whenever the country’s share market faces any collapse.

A Swiss investment bank already showed interest in the bond by offering lower interest rates in line with the international markets, sources said.

To shore up the stock market, the ICB had earlier sought funds worth Tk 5,000 crore from the government and floated bonds valued at Tk 2,000 crore.

Last year, the government had earlier decided to overhaul the ICB allegedly plagued with mismanagement.

As part of the move, the securities regulator BSEC appointed a chartered accountant firm to assess the ICB’s overall operations.

The firm reviewed the ICB’s current and past financial and non-financial performances, overall activities, and its roles in capital market development as a state-owned investment institution.

In line with the restructuring plan, which would be implemented over the next 24 months, it has strongly suggested pulling the state-owned ICB from the edge of a possible financial collapse.

The ICB has three subsidiaries- ICB Capital Management, ICB Asset Management Company, and ICB Securities Trading Company.

The country’s lone state-run investment institution came to the spotlight sometimes because of its alleged investment in several fundamentally weak listed and non-listed companies.

It has huge investments in 14 junk companies, which were delisted from the bourses.

The companies are AB Biscuit, Aroma Tea, Dhaka Vegetable Oil, Froglegs Export, Gem Knitwear Fabrics, Islam Jute, Karim Pipe Mills, Mark BD Shilpa, Meghna Vegetable Oil, Milon Tanners, Paper Converting, Paragon Lather, Progressive Plastic, and Quasem Timber.