Sajida Foundation approved issuing Tk198cr bond

Infographics: TBS

The Bangladesh Securities and Exchange Commission (BSEC) has approved Sajida Foundation, a non-governmental organisation, to issue a Tk198 crore bond to fund its microcredit initiatives.

According to officials at the commission, the approval was given on Sunday.

Earlier in December last year, the non-profit voluntary organisation applied to the securities regulator for approval to issue a Tk300 crore bond with a discounted value of Tk253.8 crore.

This will be the foundation's second zero-coupon bond, which will be unsecured, non-convertible, and fully redeemable. The bond's tenure will be three years, and the discount rate will range from 9.5% to 11.5%.

DBH Finance PLC will act as the trustee of the bond, with BRAC EPL Investments and BRAC Bank serving as arrangers. The bond will be issued among financial institutions, banks, insurance companies, and high-net-worth individuals through private placement.

Speaking on condition of anonymity, a Sajida Foundation official earlier informed The Business Standard, "The foundation has applied to raise funds from the bond market primarily for debt diversification, which will be used in microfinance."

Following the Covid pandemic, there has been significant demand from the foundation's customers. Therefore, the organisation deemed the bond market suitable to meet this demand, the official added.

"Although there has been a tendency for NGOs to seek foreign loans, this has diminished due to the devaluation of the taka. Additionally, the Bangladesh Bank has restricted the issuance of such loans due to the weakening of the taka."

Furthermore, bank loans have become costly due to high-interest rates. For example, a loan taken when a dollar was equal to Tk84 now has to be repaid at a rate of Tk110. This is why raising funds through bonds is preferred, as they also offer a longer repayment period, the official explained.

In May 2021, the BSEC allowed Sajida Foundation to issue a Tk100 crore green zero-coupon bond.

In the fiscal 2022-23, Sajida Foundation earned Tk778 crore, comprising Tk620 crore from microfinance, Tk41.95 crore from donor grants, Tk77 crore from investments, Tk16 crore from bank interests, Tk23 crore from the hospital, and Tk1.11 crore from other sources.

Founded in 1987, Sajida Foundation started as a private, family-funded charity. The organisation has implemented numerous major development activities, including microfinance, micro-insurance, health, education, and other specialised programs designed specifically for the underprivileged.

Currently, Sajida operates across 36 districts, covering a population of over 60 lakh. Sajida owns 51% of Renata Limited, a listed pharmaceutical company. Dividends from Renata constitute a significant portion of Sajida's financial sustainability.

Additionally, Sajida collaborates with a consortium of national and international donors.