Beximco Green Sukuk’s private subscription begins today

Beximco Green-Sukuk Al Istisna'a, the first-ever asset-backed securities by any private sector entity in Bangladesh, opens for private subscriptions today and will close on 26 August.

Half of the Tk3,000 crore Sukuk will be sold through private placement to eligible investors, including institutions and wealthy individuals, according to the documents of the Sukuk.

One-fourth of the Sukuk units are reserved for existing shareholders of Beximco Limited, and the interested shareholders, who were holding the company shares on 19 July, are entitled to subscribe.

An investor will have to subscribe to one or multiple lots of 50 units of the Sukuk havinga face value of Tk100 each.

Later, over the public subscription period of 16-23 August, public investors can subscribe to the remaining 25% reserved for public offer.

Oversubscription into any of the offers would result in pro-rata allocation while any unsubscribed portion would be offered to the other group of investors before the final issuance of the asset-backed securities on 31 August.

What are there for investors?

Bangladesh capital market that lacks liquid-fixed income securities is set to get a breakthrough as soon as the Sukuk gets listed on the bourses, analysts say.

Also, the Sukuk would attract the investors, especially the institutional ones, who badly need sufficient fixed-income securities in the bourses to maintain a healthy diversified investment portfolio.

Beximco Green Sukuk is offering a guaranteed 9% annual profit while the risk-free rate in five-year treasury bonds is below 4% now.

On top of that, if Beximco Limited pays any cash dividends to its shareholders over 9%, one tenth of the additional rate would be added to the Sukukholders' annual return.

Individual investors, who also are looking for higher returns from fixed-income investments, can opt for the Sukuk instead of bank deposits.

The convertibility option added to the attraction of the Sukuk will allow investors to annually convert up to 20% of their Sukuk investments into shares of Beximco Limited. The facility can be used throughout the five years' tenure of the Sukuk. 

Any unexercised chance to convert would result in the redemption of the Sukuk at the end of the fifth year from 31 August this year.

During the conversion, investors will get Beximco shares at a 25% discount from the price benchmark of the prior 20-day weighted average closing price of the shares at the Dhaka Stock Exchange.

The Sukuk

Beximco Limited as the originator of the Sukuk will use the assets owned by the trustee on behalf of the investors, and the assets will be transferred to Beximco as soon as it pays its investors back.

The listed conglomerate will expand its textile facilities in a green manner while a portion of the proceeds will be utilised to accomplish Beximco's two solar power projects in North Bengal.

Investment Corporation of Bangladesh (ICB) is the trustee of the Sukuk while local investment banks City Bank Capital Resources and Agrani Equity and Investment Ltd are joint issue managers.

The Sukuk will boost Beximco's revenue and profitability, Beximco Vice-Chairman Salman Fazlur Rahman told The Business Standard.