Norfund, owned by the Norwegian government, has reached an agreement to buy 10 percent equity shares in Mutual Trust Bank at more than Tk 173 crore.
After a series of negotiations, both sides have agreed to make the deal at Tk 27.19 a share, including Tk 17.19 as premium, Anis A Khan, managing director of the private commercial lender, confirmed to The Daily Star yesterday.
He said the board of the bank approved the Norfund's offer at a meeting on Wednesday. In exchange, Norfund will get a seat in the board of the bank.
“Indeed, the trust that Norfund has placed in us will brighten our reputation and image outside the country,” Khan said.
With Norfund's investment, he said, MTB's capital base will also increase significantly to meet the Basel III requirement.
Presently, the bank's paid-up capital stands at Tk 573 crore and it will go up to Tk 746 crore thanks to the injection of the fund.
The Norwegian Investment Fund for Developing Countries (Norfund) facilitates economic growth and poverty reduction by investing risk capital in profitable businesses in developing countries.
This is the first time it has agreed to buy equity stakes in a bank in Bangladesh.
Earlier this year Norfund signed an agreement with MTB to provide a concessional loan of $20 million for the socio-economic development of Bangladesh. Norfund gave equity and loans to Brac Bank in 2010 and loans to City Bank last year.
International Finance Corporation, an arm of World Bank Group, bought 5 percent stakes in City Bank a couple of years ago.
Now MTB will have to go through some processes, including getting approval from the central bank and the Bangladesh Securities and Exchange Commission.
The bank has convened an extraordinary general meeting on November 1 to get the consent of the shareholders to issue fresh capital and change a few clauses of the Articles of Association in order to sell the shares and accommodate Norfund in the board, according to a notice posted on the Dhaka Stock Exchange yesterday.
The news of the Norway government's investment in MTB has boosted the price of the bank's shares in the premier bourse. The bank's shares closed Tk 38.5 yesterday, up more than 8 percent from that two days ago.
In addition to banks, Norfund has indirect investment in Bangladesh's eight firms: Ananta Apparels, Butterfly Marketing, Fiber @ Home, Popular Pharmaceuticals, Rahimafrooz Superstores, Runner Automobiles, STS Holdings and Zero Gravity Ventures.
Norfund was set up by the Norwegian government in 1997 to help the economic development of poor countries by providing capital to local companies.
The fund receives its investment capital from the state budget. Its priority sectors are clean energy, financial institutions and food and agribusiness. It also supports small and medium sized companies in the developing countries.