Deshbandhu Group: Target $250m from global investors
Deshbandhu Group plans to raise $250 million (more than Tk 2,100 crore) from international investors through a Sukuk bond as the conglomerate looks to expand its business and repay its local debts.
Golam Mostafa, chairman of the group, said they want to raise the fund through the Shariah-based Sukuk bond as funds from domestic banking sources are expensive.
"We cannot afford to do business by paying effective interest of as much as 16 percent on loans. We want to clear our debts by raising the fund. We want to become a company with zero loan," Mostafa told The Daily Star yesterday.
The group has business ventures in various sectors, including food and beverage, textile, real estate, shipping and service sector. Its annual turnover is Tk 2,400 crore.
The group will invest part of the $250 million fund in establishing a fibre factory in Sirajganj to produce Polyester Chips (PET chips) and Polyester Staple Fibre (PSF), which will be exported to European and American markets.
The annual production capacity of the factory will be 300,000 tonnes, said the group on its website.
"We have already developed land for setting up the factory. We will export PET chips and PSF. We want to reap benefits of duty-free and quota-free access to European markets. We will also be able to get duty benefits in the US market," said Mostafa.
London-based Al Waseelah PLC, which is the issuer of the Sukuk bond offering, mandated Bedford Row Capital (BRC) for the offering of $250 million.
A sukuk is an Islamic financial certificate, similar to a treasury bond, and is structured to generate returns in compliance with Islamic finance principles.
The BRC, alongside international lead manager BlueMount Capital, will structure the Sukuk to help Deshbandhu Group in its next growth phase, according to a BRC press release published on the Middle East North Africa Financial Network (MENAFN) website.
The Sukuk will finance the repayment of the current outstanding debt, invest in new technology and scale up capacity of the group's businesses. It will be listed on the Frankfurt Stock Exchange, maturing in 2028.
The BRC and BlueMount Capital will assist Deshbandhu Group with the preparation of legal documents, structures, draft investment memorandum and comprehensive corporate presentation packs, which will be distributed among prospective institutional investors.
Mostafa said the Sukuk is expected to be listed on the Frankfurt Stock Exchange by June this year.
The Deshbandhu chairman said the group aims to fetch $600 million through export of PET chips and PSF by 2023.
"We will invest in export-oriented industry. Our target is to be listed on New York Stock Exchange by 2023," he said.
In the press release, Scott Levy, CEO of the BRC, said, "Being awarded this Sukuk mandate is a significant achievement as it is the first corporate Sukuk out of Bangladesh and will be the blueprint for more issuance out of this region.
"We are devoted to providing our expertise to this growing market segment and to support issuers and investors with attractive options from this growing market."
Saliba Sassine, managing director of BlueMount Capital, said they are pleased to be part of the first international Sukuk issuance by a private corporation from Bangladesh, the next Asian Tiger economy and one of the fastest growing economies in the world.
"We are committed to providing innovative financing solutions for companies wanting to access the Sukuk market," noted Sassine.