Akij secures $43m from HSBC to expand particle board business
Akij Group has obtained $43 million in loans from HSBC to import machinery from Germany for its upcoming state-of-the-art plant for manufacturing modern particle boards.
The particle board mill, which will be Akij Group's second, will be the largest in South Asia, with per day production capacity of 1,000 cubic metres.
The plant, to be located at Trishal, Mymensingh, will cost about Tk 500 crore.
The debt financing includes Euler Hermes' first guaranteed facility arranged for a private company in Bangladesh by the British bank.
Euler Hermes is the official export credit agency (ECA) of Germany, which guarantees and enables German exporters and lenders to receive cover against associated risk.
The Euler Hermes-guaranteed facility amounts to 22.6 million euros and will be funded by HSBC Germany. HSBC Bangladesh will provide term loans for the remaining amount from its offshore banking unit.
The transaction is a testament of HSBC's expertise in providing international financing solutions in Bangladesh through the bank's global network and connectivity, Francois de Maricourt, chief executive officer of HSBC Bangladesh, said in a statement.
Arnaud Cachard, head of export finance of HSBC Asia Pacific, said the development of ECA financing opens up a major source of funds for Bangladesh's industrial sector for capital expansion.
Founded in the early 1940s, Akij Group is one of the largest companies in Bangladesh, employing more than 32,000 in its operations in the jute, textiles, food and beverage, and building materials sectors. Akij Particle Board Mills is part of the group that produces international standard particle board.
“We will produce the most modern particle boards in the world with raw materials from renewable sources conforming to the highest level of environmental and safety standards,” said SK Bashir Uddin, managing director of Akij Group.
This will also benefit the local furniture exporters to enhance their businesses, he added. The machinery will be brought from German supplier Simpelkemp.
HSBC had previously arranged ECA-backed credit facilities for public sector projects.