Over 27% subscribed by three state-owned banks

Three state-owned banks have subscribed more than 27 per cent of the total private placement offer worth Tk 2,103 crore of Beximco Green-Sukuk Al Istisna – the first-ever asset-backed securities by a private sector entity in Bangladesh.

Of the private placement figure that makes up more than 70 per cent of the bond, Janata Bank invested Tk 220 crore, Rupali Bank Tk 200 crore, and Agrani Bank Tk 150 crore, sources said.

The total investment of the three banks accounted for 27.10 per cent of the total private placement offer.

Twenty-six institutional investors, including banks, insurances and Asset Management Companies subscribed to the bond. The subscription opened on August 16 this year.

Apart from the three state-owned banks, 17 private commercial banks invested Tk 1,084 crore and three insurance companies Tk 54 crore in the bond, according to the sources.

After an initial hiccup, the subscription for the Tk 3,000 crore bond floated by Beximco Group was completed on December 15 much before January 5—the extended deadline, according to City Bank Capital Resources Limited CEO Ershad Hossain. The bond was undersubscribed despite the extension of the subscription period twice.

After completion of the subscription, the bond received Tk 2,103 crore from the private placement investors, Tk 2 crore from the existing shareholders, and Tk 135 crore from the underwriters.

On June 23, the Bangladesh Securities and Exchange Commission (BSEC) approved the bond and allowed the issuer to raise half of the bond through the private placement, Tk 750 crore through the existing Beximco shareholders and the remaining Tk 750 crore through an initial public offering in compliance with the commission’s public offer rules. In September, the Bangladesh Bank allowed banks to invest their entire special funds in the private sector-issued green bond from their special funds formed to invest in the stock market. In February, banks were permitted to set up a Tk 200 crore fund for investment in the stock market.

The Sukuk units, with a face value of Tk 100 each, were offered in a lot of 50 units or multiples that amount to at least Tk 5,000. However, there is no limit to the subscription process.

The tenure of the bond is five years, of which investors will gain a minimum of 9 per cent as secured annual returns.

According to the company, the fund raised from the Sukuk will be used for the construction of two solar projects – Teesta Solar and Korotoa Solar – two subsidiaries of Beximco Power Company, and financing and refinancing machinery and equipment required for expansion of Beximco’s textile division.