The Islamic Corporation for the Development of the Private Sector or ICD, the private sector financing arm of the Islamic Development Bank, yesterday announced investment of about Tk 155 crore to acquire 10 percent stakes in Bangladesh's Al-Arafah Islami Bank.
Al-Arafah Islami Bank will issue around 11 crore fresh shares of Tk 10 each with Tk 4 as premium to the ICD.
Khaled Al Aboodi, chief executive officer of the ICD, and Badiur Rahman, chairman of Al-Arafah Islami Bank, inked the agreement on behalf of their respective organisations at a programme at the capital's Sonargaon Hotel.
The investment is, however, subject to shareholder consent and regulatory approvals from the central bank, the Bangladesh Securities and Exchange Commission and other relevant authorities.
Al Aboodi said the strategic initiative reflects ICD's efforts to play the role of catalyst in the promotion of Islamic finance and private sector development in Bangladesh. Earlier, the ICD committed $110 million for manufacturing, textiles and apparel, construction, and power sectors of Bangladesh along with $70 million lines of financing for the small and medium enterprises sector.
The proposed collaboration with Al-Arafah Islami Bank exhibits the ICD's long-term vision to bring not only good corporate governance, international best management practices, innovative Islamic products but also to bring stability and confidence in Bangladesh's financial sector, he added.
Rahman said Al-Arafah will materialise its vision of having the finest Islamic finance infrastructure thanks to the deal with the ICD.
He said having ICD as a strategic shareholder in the bank is the result of the confidence and trust kept on the management and the board by all the stakeholders over the last 20 years.
The new avenue would strengthen the rating of the bank and pave the way for extending network with other Islamic finance players from around the world, he added.
Listed on the Dhaka Stock Exchange in 1998, each share of Al-Arafah Islami Bank yesterday traded between Tk 13.9 and Tk 14.2, before closing at Tk 14.
Earlier in February, the International Finance Corporation, the private sector arm of the World Bank Group, invested more than Tk 131 crore to acquire 5 percent stakes of local City Bank.