Banks subscribe to 74% of Beximco Sukuk’s private placement amount

Twenty banks have subscribed to more than 74% of the private placement amount of Tk2,250 crore of the Beximco Green-Sukuk Al Istisna – the first-ever asset-backed security by a private sector entity in Bangladesh, according to the Dhaka Stock Exchange (DSE).

The investments have come from 14-15 December.

The rest of the amount has come from brokerage firms, insurance companies, asset management companies, and other corporates.

According to a stockbroker, banks have injected the fresh amount into the Sukuk bond as the central bank has eased the policy for such investment. Due to the Sukuk subscription, the share market fell into a liquidity crisis and that is why indices of both stock exchanges witnessed volatile sessions in the last couple of weeks.

On 27 September this year, the Bangladesh Bank extended till 31 December 2028 the tenure of the capital market special fund for investment in green Sukuk bonds to finance renewable energy, which will not be counted towards a banks' capital market investment limits.

On 23 June this year, Beximco Limited secured approval from the Bangladesh Securities and Exchange Commission (BSEC) to launch its Tk3,000 crore Sukuk bond for a five-year tenure.

The rest of the amount has come from underwriters and public subscriptions. But Beximco Limited's existing shareholders subscribed only Tk2 crore in the bond.

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.

The 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 only 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.