Dhaka Bank allowed to issue Tk200cr bond

Dhaka Bank Ltd has received approval from the securities regulator to issue a perpetual bond worth Tk200 crore in a bid to strengthen the additional Tier-1 capital base of the private sector lender.

The Bangladesh Securities and Exchange Commission (BSEC) approved the bond at a meeting on Thursday.

According to a BSEC press release, the bank will raise Tk150 crore through private placements and the remaining Tk50 crore through a public offering. This would be a coupon-bearing, contingent convertible perpetual bond.

Local institutional investors and high-net-worth individuals can buy the bond units through a private placement while general investors will be able to get it through the public offering.

The coupon rate will be 6%-10% and the minimum subscription amount of the bond will be Tk1 crore in private placement while it stands at Tk5,000 for the public offer, added the press release.

A coupon payment refers to the annual interest paid on a bond between its issue date and the date of maturity.

Local merchant bank IDLC Investments Limited will act as the trustee of the bond while another investment bank UCB Investment Limited will be the issue manager, underwriter and arranger.

Bank Asia Ltd was listed on the capital market in 2000 and its total paid-up capital is Tk949.62 crore.

As of 31 August, sponsors and directors jointly held 42.54%, institutions 27.99% and general investors 29.47% shares in the private lender.

In the January-June period of 2022, the earnings per share (EPS) of the bank grew over 15% to Tk1.30 compared to the previous year. But its net operating cash flow remains negative because of increased loans, advances and investments in government securities.

It had paid a 12% cash dividend to its shareholder for the last year when it posted a net profit of Tk213.64 crore – 7% higher than the previous year.

Dhaka Bank's share price got stuck on the floor price at Tk13.60 at the Dhaka Stock Exchange on Thursday.