IFAD Autos to invest bond fund in associate firm

Automobiles company IFAD Autos Limited has decided to invest its bond fund to its associate firm—IFAD Multiproducts Limited.

The listed firm is slated to put the agenda in its 34th annual general meeting (AGM) to be held on December 18 for getting approval from its shareholders, further subject to the regulatory approval.

The automobiles company would invest Tk 225 crore out of the fund worth Tk 300 crore of the secured coupon bearing bond (proposed) to the associate firm, according to a filing posted on the website of the Dhaka Stock Exchange (DSE) on Monday.

The remaining Tk 75 crore would be utilised for the working capital of IFAD Autos Limited.

Earlier on October 4, the securities regulator Bangladesh Securities and Exchange Commission (BSEC) exempted IFAD Autos Limited from a provision of the debt securities rules enabling the firm to invest its bond fund in the associate firm.

The commission had exempted the listed company from a provision of the Bangladesh Securities and Exchange Commission (Debt Securities) Rules, 2021 to allow it to invest the fund in the associate firm.

The BSEC, however, had imposed a condition that the fund of Tk 300 crore raised by IFAD Autos through the issuance of secured fully redeemable coupon-bearing floating rate bonds or any parts of the fund to be invested in IFAD Multi Products Limited would be subscribed in ordinary shares at face value as per the prior approval of the commission.

According to the existing bond securities rules, the fund of any debt securities or Islamic shariah-based securities (ISBS) is not allowed to be used for providing loans or acquisition of shares of any person or entity whose function is closely related to the bond issuer.

Thus, a bond issuer cannot use the bond fund for any of its parent company, subsidiaries, associates, or sister concerns.

Earlier in November 2019, automobile dealer IFAD Autos decided to raise up to Tk 300 crore through the issuance of a coupon-bearing non-convertible fully redeemable bond.