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Tk2,625cr Beximco bond gets BSEC approval

Staff Correspondent
31 Mar 2024 22:05:36 | Update: 31 Mar 2024 22:05:36
Tk2,625cr Beximco bond gets BSEC approval

The Bangladesh Export Import Company Ltd (Beximco), the flagship company of Beximco Group, has received regulatory approval to raise a hefty fund worth Tk 2,625 crore from the capital market through bonds, aimed at loan repayment.

Bangladesh Securities and Exchange Commission (BSEC), the securities regulator, gave approval to the lenders’ bond proposals at a meeting held at Agargaon office on Sunday with its Chairman Shibli Rubayat Ul Islam in the chair.

As per regulatory approval, the publicly traded company would issue an unsecured, non-convertible, redeemable Beximco 1st Unsecured zero-coupon bond to raise funds worth Tk 2,625 crore.

Beximco would utilise the funds for the purpose of repaying existing loans of the company and for investment and loans for development of "Mayanagar" – a mixed-use, multipurpose affordable real estate project.

The funds would be raised through private placements with a unit price of Tk 50,000 each, with a discount rate of 15 per cent.

Financial institutions, insurance companies, corporate bodies, asset management companies, mutual funds, and high net-worth individuals are allowed to purchase the bond units through private placements.

Sandhani Life Insurance Co would act as the trustee of the bond, while IFIC Investment Ltd would be the arranger of the bond.

At the same meeting, the commission also approved draft rules for the Real Estate Investment Trust (REIT), to create opportunities for people to receive dividends from real estate investments and finance the sector from the market.

Back in November 2022, the securities regulator held a meeting with three committees formed earlier to frame regulations for the draft rules. The Real Estate Investment Trust fund will collect funds from general investors, such as mutual funds, by issuing units.

Senior officials of the BSEC said REIT is going to add a new horizon in the country’s capital market that had long been dependent on equity products, and very recently achieved momentum in publicly traded debt instruments.

The Real Estate Investment Trust would democratise the real estate market, as mutual funds did in the equity market, by allowing small sums to be collectively invested in a basket of real estate properties.

After debt instruments, REIT would be another asset class to offer portfolio investors diversifying opportunities, said a BSEC official.

The REIT will collect funds from general investors, like mutual funds, by issuing units. They will get dividends against their funds collected for constructing housing and multipurpose complexes.

The investors will also be allowed to transfer their units of the asset-backed securities, like the mutual fund units.

The REIT usually invests in most real estate property types, including apartment buildings, cell towers, data centers, hotels, medical facilities, offices, retail centers, and warehouses.

BSEC Commissioner Dr Shaikh Shamsuddin Ahmed said, “We will have to move forward, taking into account the issue of ensuring confidence among investors. We will have to think about the proper valuation of products.”

In other countries, the companies that pool such funds are required to distribute more than 90 per cent of their profits.

Besides, on March 11, the Beximco disclosed that to raise Tk 1,500 crore through the issuance of a zero-coupon bond for repayment of existing loans.

The publicly traded company has also signed a joint venture development agreement with Sreepur Township Ltd, according to a disclosure of the company.

Beximco Ltd Board of Directors has considered and approved the initiation of the process of issuance of the "Beximco 1st Zero Coupon Bond" for Tk 1,500 crore for the purpose of repaying existing loans of the company and for investment with Sreepur Township Ltd as a joint venture partner for the development of “Mayanagar” – a mixed use, multipurpose affordable real estate project.

Beximco's joint venture with Sreepur Township is for the development of “Mayanagar,” a mixed-use, multipurpose affordable real estate project, located on a 100-acre land on the Nabinagar-Chandra Highway.

The housing project will be a fully secured, gated, and self-contained township comprising 18,000 apartments and will offer a comprehensive range of facilities, including healthcare, education, entertainment, sports, and recreation, along with all necessary civic and lifestyle amenities.

The commercial space, spanning 5 million square feet, will include serviced apartments, a hotel, offices, a convention center, and a shopping mall. The entire project is set to be developed as a green and eco-friendly township.

Currently, Beximco owns 75 percent of the project land, with Sreepur Township owning the remaining 25 per cent, and the profits will be shared accordingly.

Beximco said that a globally renowned architectural and engineering consultancy firm has been appointed for the design, development, and supervision of the project on a turnkey basis. An international engineering, procurement, and construction (EPC) contractor will be appointed for the project's implementation.

A turnkey business is an arrangement where the provider assumes responsibility for all required setup and ultimately provides the business to the new operator only upon completion of the aforementioned requirements.

The net profit of Beximco Ltd fell by a staggering 99.52 per cent in the first six months (July-December) of FY24 due to disruptions in the international supply chain caused by the US dollar crisis, the Russia-Ukraine war, and the price hikes of gas and electricity.

On July 8, 2021, the Bangladesh Securities and Exchange Commission (BSEC) gave approval to Beximco for issuing a Tk 3,000 crore Shariah-compliant green Sukuk.