Beximco Group announced it would issue Sukuk worth TK 3,000 crore

Beximco Group announced it would issue Sukuk for the purpose of construction of the solar projects of Teesta Solar and Korotoa Solar, the two subsidiaries of Beximco Power Company.

A Sukuk is an Islamic financial certificate, similar to a treasury bond, which complies with Shariah laws. 50 per cent of the Sukuk would be privately placed while 25 per cent would be reserved for Beximco shareholders and the remaining 25 per cent would be floated through public offers, as the Sukuk would be listed on the local bourses upon getting the Bangladesh Securities and Exchange Commission  approval.

In December last year, the government issued the country's first-ever Tk 8,000 crore Sukuk for a safe water supply project. Investors submitted bids worth Tk 15,153 crore during the auction. Beximco's Sukuk units will have a face value of Tk 100 each, while minimum subscription size will be Tk 5,000 only in public offer with five years tenure. Sukuk holders will receive their periodical profits twice a year.

The base rate of the Sukuk has been set at 9 per cent, which means investors would be getting 9 per cent secured annual return. Also, the Sukuk holders will have the option to convert up to 100 per cent of their investments in the Sukuk into ordinary shares of Beximco within five years, said the company. The issuance of Sukuk bonds can create opportunities for investors from Malaysia to look into Bangladesh as another potential investment destination, said experts.

They also recommended the simplification of the Sukuk issuance process, streamlining regulatory procedures and offering tax incentives for both issuers and investors with regards to the Sukuk market.

As mega projects are developing in Bangladesh, there is a need for more investment. The demand for this investment can be met through Sukuk bonds, said Ali Ahsan, head of Islamic origination at Standard Chartered Bank.