How banks were forced to buy Beximco's Sukuk bond
Of the total Sukuk amount, 70% of the subscriptions came from the banking industry
Beximco floated a Tk3,000 crore Sukuk bond the first-ever asset-backed securities by a private sector entity in Bangladesh in 2021, to finance its two solar power plants and for expansion of its textile division.
Of the amount, Tk750 crore was offered in IPO (Initial Public Offering) but it remained undersubscribed which reflects the low confidence of general investors on Beximco group.
Later, Beximco used Bangladesh Bank to issue a circular allowing banks to invest in Sukuk bond from the capital market special fund which will be excluded from capital market exposure. Banks can invest 25% of their capital into stock, as per banking act.
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After this circular, top executive of most banks were called by the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Bank to buy Sukuk bond, said employees of at least 10 banks when talking to The Business Standard.
Though, Sukuk was asset backed but Beximco's asset was not transferred officially, sources of ICB (Investment Corporation Bangladesh) said as it was working as trustee of the bond. Only equipment of solar panel were transferred against the bond. As a result, this investment was risky for banks but they gave into the pressure.
City Bank invested Tk300 crore in Sukuk bond unwillingly under pressure from various stakeholders, said its Managing Director Mashrur Arefin.
Meanwhile, Brac Bank Managing Director Selim RF Hussain said he was also pressurised to invest in Sukuk bond along with others. However, he denied to invest saying "I am not mad that I will invest the bank's money into this."
Banks who invested under pressure are now regreting, he added.
Of the total Sukuk amount, 70% of the subscriptions came from the banking industry – both private and public – followed by the corporate investor and the mutual fund, respectively.
Besides, individual investors who have subscribed comprise only 2% of total Sukuk bonds while Beximco shareholders subscribers were only 1% in the debt security, according to issue manager.
