Twenty banks have subscribed for more than 74% of the amount of the 2,250 crore Tk private placement of 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 came from December 14th to 15th.
The rest of the amount comes from brokerage firms, insurance companies, asset management companies and other businesses.
According to a stock broker, the banks injected the new amount into the Sukuk bond because the central bank relaxed the policy for such an investment. As a result of Sukuk’s underwriting, the equity market fell into a liquidity crunch and that is why the indices on both exchanges have seen volatile sessions over the past two weeks.
On September 27 of this year, the Bangladesh Bank extended until December 31, 2028 the mandate of the special capital market fund for investment in Sukuk green bonds to finance renewable energy, which will not be counted in the investment limits of banks in the capital market.
On June 23 of this year, Beximco Limited obtained approval from the Bangladesh Securities and Exchange Commission (BSEC) to launch its Sukuk bond of Tk 3,000 crore for a five-year term.
The rest of the amount comes from subscribers and public subscriptions. But the existing shareholders of Beximco Limited only subscribed to Tk2 crore in the bond.
The Sukuk would be green because the company would spend the money on environmentally friendly infrastructure.
Beximco Limited would expand its textile unit while implementing two solar power projects under its power division with money from Sukuk.
The Investment Corporation of Bangladesh is the administrator of Sukuk, while City Bank Capital Resources Ltd and Agrani Equity and Investment Ltd work jointly as emissions managers.
The base rate for the Sukuk was set at 9%, meaning that investors would get a guaranteed annual return of 9%.
The margin has been set at 10% of the difference between the base rate and the annual dividend that Beximco will pay in a given year.
The margin would be added to the base rate if Beximco’s dividend for the year in question exceeds the base rate. If the dividend is less than the base rate, there will be no negative margin.
Investors can gradually convert their Sukuk into Beximco shares during his five-year tenure, but they can only convert a maximum of 20% of the total in one year.
Conversion options not exercised during a year may also be exercised the following year, as well as the option for the current year.
If someone does not convert, they will get the capital back after the fifth year.