Beximco can now convert Sukuk into shares without prior approval

Highlights:

• Investors converted Sukuk worth Tk170 crore in the first year
• It has credited 1.96 crore new shares to the BO accounts of 325 investors
• Sukuk's trading debut was in January 2022
• On Tuesday, Sukuk was trading at Tk85 on DSE

Beximco Limited is now able to convert its Sukuk bond into shares without prior approval from the Bangladesh Securities and Exchange Commission (BSEC).

On Tuesday, the commission issued a notification exempting the company from the prior approval requirement.

As the country's first private sector company, Beximco floated a Tk3,000 crore Sukuk in 2021 to finance its two solar power plants and its textile division's green expansion.

The investors, mainly banks and some other institutions, have the right to convert 20% of their Sukuk units a year into Beximco shares at 25% discounts from the 20-day average closing price of the shares prior to the record date. Unexecuted conversion rights can also be exercised in later years.

BSEC Spokesperson Rezaul Karim told TBS that the commission issued the consent letter with the facility of converting 20% of the Sukuk investment into Beximco shares.

"However, there was a condition of obtaining separate approval from the market regulator for increasing the paid-up capital by issuing shares. But while complying with this condition, there were complications and wasted time. Hence, the company has been exempted from this condition," he added.

According to the Dhaka Stock Exchange (DSE), investors have converted Beximco Green Sukuk worth around Tk170 crore – against an option of around Tk600 crore – into common shares of the company in the first year. It has credited over 1.96 crore new shares to the beneficiary accounts of 325 Sukuk investors who applied for the conversion.

Based on the 20-day average closing price of Tk115.6 for the Beximco shares, which have a face value of Tk10 each, the conversion rate was Tk86.7.

In the first year, over 70% of Sukuk investors preferred to stick to their income investment motto as they were earning a robust double-digit annual return from the Sukuk. The conversion has increased the number of Beximco shares by 2.24%.

Meanwhile, the trustee of the Beximco Green Sukuk Al Istisna'a has approved the payment of 5.55% on the Sukuk's face value for the first half of its second year.

The Investment Corporation of Bangladesh (ICB) is the trustee of the Sukuk.

It was paid a 5.80% profit against the face value of Tk100 each in the second half of July–December 2022. In the first half of 2022, it paid the same profit to the unit holders. As a result, the Sukuk unitholders received a profit of 11.6% last year.

The Sukuk's trading debut on the stock exchanges was on 13 January 2022.

On Tuesday, the Sukuk, which has a face value of Tk00, was trading at Tk85 on the DSE.