City Bank Capital issue manager for Tk 3,000cr Beximco sukuk

Beximco Ltd has appointed City Bank Capital Resources Ltd as the issue manager as it looks to raise Tk 3,000 crore by issuing sukuk.

This will be the largest sukuk issuance in the private sector in Bangladesh.

A sukuk is an Islamic financial certificate, similar to a treasury bond and structured to generate returns in compliance with Islamic finance principles.

Bangladesh entered the sukuk era on December 28 when the central bank held its first-ever auction for the Islamic bond. The government is raising Tk 8,000 crore through the issuance of the sukuk to implement a safe water supply project.

Osman Kaiser Chowdhury, group director and CEO for power and engineering of Beximco Group, and Ershad Hossain, managing director and CEO of City Bank Capital, signed the agreement for the Sukuk Al Istisna yesterday.

Beximco is the originator of the issue, and City Bank Capital is the arranger, adviser and issue manager. The profit rate of the sukuk will be a minimum of 9 per cent per annum.

The proceeds will be utilised to construct the solar projects of Teesta Solar and Korotoa Solar, both subsidiary of Beximco Power Company, and to finance the purchase of machinery required for the expansion of Beximco's textile division, the company said in a post on the website of the Dhaka Stock Exchange (DSE).

Teesta Solar is a joint venture of Beximco Power and China's TBEA Xinjiang Sunoasis Company, and it has an agreement with Bangladesh Power Development Board (BPDB). Korotoa Solar, a joint venture between Beximco Power and the Jiangsu Zhongtian Technology Company, has a similar agreement with the BPDB.

Each Islamic bond's face value will be Tk 100, and the minimum subscription size will be Tk 5,000. The tenure is five years.

Half of the Tk 3,000 crore fund will be raised through private placement. Of the rest, 25 per cent would be issued to existing shareholders of Beximco Ltd, and 25 per cent will be set aside for public offer.

Investors will have the option to convert their investment in the sukuk into ordinary shares of Beximco within five years, the company said.

If an investor does not want to convert the securities, they will get back the fund on maturity through a single payment.

Shares of Beximco Ltd closed 0.24 per cent lower at Tk 81.90 on the DSE yesterday.