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With first-ever Sukuk, Beximco bets big on green

  • Published at 10:57 pm July 18th, 2021
Climate Tribune_Green Sukuk_Pg 20 & 21

The five-year term asset-backed Green Sukuk is convertible, redeemable and participative

Beximco has published the information memorandum for Bangladesh’s first ever Green Sukuk for Tk3,000 crore after getting approval from the Bangladesh Securities and Exchange Commission (BSEC) last Thursday.

The five-year term asset-backed Green Sukuk is convertible, redeemable and participative, the memorandum says.

The company will allocate 50% of the Sukuk issue through private placement, 25% will be offered to the existing shareholders of the company, and the rest through public offering.

Also Read - Potential of Islamic sukuk bond in Bangladesh    

The subscription of the private placement, which will be done on a first-come-first-serve basis, will close on August 22 this year, while subscription for existing shareholders and the general public will open on August 25 and close on August 27 this year.

With the Sukuk proceeds, the company plans to funnel Tk2,200 crore into a 200MW solar plant in Gaibandha and a 30MW solar plant in Panchagarh. Together, they represent the largest solar project in the country. Revenue generation of the two solar plants is guaranteed by a 20-year Power Purchase Agreement (PPA) with the government, according to the memorandum.

The government has recently scrapped several coal-fired power projects and emphasized on climate-friendly green power generation projects instead.  

Beximco seeks to cash in on the lucrative incentives offered by the government in green power projects; its power plants will enjoy tax holiday until 2034, duty-free import and certain tariff and VAT concessions.

The remaining Tk800 crore will be used to install high-speed and energy-efficient machinery, expand and modernize the existing green infrastructure of Beximco’s textile division, the memorandum adds.

BSEC Chairman Shibli Rubayat Ul Islam said that the scope for making investment is less in Bangladesh for those who want to make Islamic Shariah-based investments.

As a result, he said, the SLR of around Tk70,000 to Tk80,000 crore of the Islamic banks have long remained idle.

Since a scope has been created for making alternate investment, the religious-minded people now want to make investment in the Shariah-based Sukuk bond.

“This Sukuk bond will be able to bring the idle money of the religious minded people into investment, which will play a big role towards national development and arrangement of capital. Then such idle money will also contribute towards country’s industrialization and expansion of trade and commerce,” he said.

The BSEC chairman also hoped that with the launching of Shariah-based Sukuk bond, more large-scale investment would come in future from abroad.

Beximco Managing Director OK Chowdhury said the Sukuk bond has already garnered a lot of interest. 

“Many financial institutions, high net worth individuals, foreign investors and non-resident Bangladeshis are approaching the company for private placement,” he added.

Also Read - Beximco sets off with maiden 3,000C green Sukuk

Economist and Agrani Bank Chairman Dr Zaid Bakht told BSS that the capital market of the country is mainly equity-based but product diversification is especially needed to give protection to the investors.

Dr Zaid said two bonds of PRAN have already been issued with enough engagement of foreign investors. In addition to this, the green Sukuk bond has now been added as many now prefer Islamic products.

“The added advantage of Sukuk bond is that the religious people of Bangladesh like Shariah-based investment instead of the traditional bond. The special feature of Beximco bond is that it is convertible and exchangeable. The shares can be converted in future if anyone wishes,” he added.

He also hoped that following the footprints of Beximco, more institutions will come forward to bring bonds in the market.