General investors had earlier subscribed only 56% of the total public offer of Tk750 crore through the Dhaka Stock Exchange (DSE).
The subscriptions of the Beximco Green-Sukuk Al Istisna – the first-ever asset-backed securities by a private sector entity in Bangladesh – have been completed, according to its issue manager. General investors had earlier subscribed only 56% of the total public offer of Tk750 crore through the Dhaka Stock Exchange (DSE).
Elaborating on the pattern of subscriptions, the issue manager said 70% of the subscriptions have come from the banking industry – both private and public – followed by the corporate investor and the mutual fund, respectively.
Besides, individual investors have subscribed below 2% while Beximco shareholders subscribed only 1% in the debt security, said Ershad Hossain, managing director at City Bank Capital Resources Limited, the issue manager of the Sukuk. He said Beximco shareholders did not inject adequate fresh funds in the Green Sukuk as they put the company’s stocks ahead of the debt security.
On 23 June this year, Beximco Limited secured approval from the Bangladesh Securities and Exchange Commission (BSEC) to launch its Tk 3,000 crore Sukuk bond for a five-year tenure. Out of the total amount, the listed company was supposed to place Sukuk units worth Tk 2,250 crore privately, of which Tk 750 crore would be offered to the company’s existing shareholders, and Tk 1,500 crore to other investors.
Its public subscriptions opened from August 17-23. But due to the under-subscription of the public offer, the BSEC extended the offer period till 30 September. The Sukuk units having a face value of Tk 100 each will have to be subscribed in a lot of 50 units or multiples that would amount to at least Tk 5,000. The Sukuk would be a green one as the company would spend the money on eco-friendly infrastructures.
Beximco Limited would expand its textile unit alongside implementing two solar power projects under its power division with the Sukuk money. Investment Corporation of Bangladesh is the trustee of the Sukuk, while City Bank Capital Resources Ltd and Agrani Equity and Investment Ltd are jointly working as issue managers.
The base rate of the Sukuk was set at 9%, which means investors would be getting a 9% secured annual return. The margin was set at 10% of the difference between the base rate and the annual dividend that Beximco will pay in a specific year. The margin would be added to the base rate if Beximco’s dividend for the specific year surpasses the base rate. If the dividend is lower than the base rate, there would be no negative margin.
Investors can gradually convert their Sukuk to Beximco shares over its five-year tenure, but they can convert a maximum of 20% of the total in a year. Unexercised options to convert in a year can be exercised in the following year as well, along with the current year’s option. If someone does not convert, they will get the principal back after the fifth year.
In a circular, the central bank allowed banks to invest in Sukuk bonds, which are being issued for eco-friendly projects, from their capital market special funds.