Beximco Sukuk IPO subscribed over 56% by deadline

The Tk 750 crore initial public offering (IPO) of Bangladesh Export Import Company's Sukuk bond has received a tepid response from general investors even after extending subscription period twice.

The issue was subscribed 56.26 percent within the deadline ended on September 30. The offer received bids worth Tk 422 crore from the investors, according to the Dhaka Stock Exchange (DSE).

The lukewarm response has from the public offer, the subscription timeframe for the Sukuk bond has been extended to September 30 this year for the second time.

In the first round, the subscription for the country's largest private Sukuk bond started on August 17 and ended on August 23. After the lukewarm response, the subscription period was extended to September 30.

As per debt securities rules, at least 30 per cent of the public issue or offer of any securities under these rules shall be subscribed by the general public. Provided that in case of under-subscription above 50 per cent of the public issue after subscription of 20 per cent by the underwriter, if necessary, the issue will be canceled.

Besides, according to the consent letter, any unsubscribed amount in the private offer must be offered through a public offer and any unsubscribed amount in the public offer can be arranged through private placement.

On June 30, Bangladesh Securities and Exchange Commission approved the issuance of a Tk 3,000 crore green Sukuk bond in favor of Beximco Limited on June 23, to finance construction goals and equipment procurement.

Sukuk is an Islamic financial certificate, similar to a treasury bond, which complies with Shariah laws.

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

As per the commission’s statement, half of the Tk 3,000-crore fund would be raised through private placement, and Sukuk worth Tk 750 crore would be raised from the existing Beximco shareholders.

The remaining Tk 750 crore will be raised through an initial public offering in compliance with the commission’s public offer rules.

Sukuk holders will have the option to convert up to 20 per cent of the Sukuk to ordinary shares of Beximco Ltd annually at a 25 per cent discount to the conversion price. The conversion price will be the weighted average price of 20 trading days before the record date.

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

The Investment Corporation of Bangladesh (ICB) is the trustee of the bond offering. The City Bank Capital Resources Limited and Agrani Equity & Investment Limited are the issue managers of the bond.