BD Finance signs $2bn agreement with US financing firm

Bangladesh Finance and Investment Company Ltd, popularly known as BD Finance, has signed an agreement with USA-based infrastructure financing company Sovereign Infrastructure Group (SIG) on Thursday to bring foreign financing of over $2 billion to Bangladesh.

The signing ceremony hosted by the Embassy of Bangladesh in Washington, DC commemorated the execution of a memorandum that will serve as a long-term, best-efforts collaboration framework intended to enable the SIG to mobilise US capital market investors into Bangladesh infrastructure projects through BD Finance, according to a joint press statement.

With more than $2 billion in pipeline, BD Finance would avail $40 million or around Tk340 crore as direct secured loan to be used for lending to small and medium enterprises, green energy projects, women entrepreneurs, social housing, economic empowerment initiatives for transgender individuals, and also refinancing of existing BD Finance obligations, according to a summary of the Memorandum's content, which was executed on 17 March 2021.

Kyser Hamid, managing director and CEO of BD Finance, and Lerry Knox, co-founder and CEO of the SIG, signed the memorandum earlier on behalf of their respective parties.

The two firms also agreed that maintaining at least 4% shares in BD Finance, the SIG will be guaranteed a seat in the Bangladeshi listed financing company's board over the next 10 years – the tenure of the memorandum.

The SIG and BD Finance intend to work together to mobilise global capital market investors into Bangladesh.

Kyser Hamid told The Business Standard that the planned financing of more than $2 billion – the largest ever to any Bangladeshi financial institution – is scheduled to take place over next two years and the beginning would take 4-5 months to accomplish regulatory processing.

The total might vary based on securing investment or financing opportunities and eligibility criteria, he added. "We may bring more from the US investors if we can ensure the projects' eligibility."

Lerry Knox said, "The SIG was founded to bridge the global infrastructure investment gap by mobilising US institutional investors' capital into growth markets such as Bangladesh.

Bangladesh is a top priority for the SIG since it is one of the fastest growing economies in the world with its 8th largest population and membership in the "Next 11" economies, he added.

Bangladesh is currently on track to invest an impressive $417 billion in infrastructure by 2040.

"Through the engagement with BD Finance, the SIG hopes to play a leading role with our partners to support the country's tremendous growth," said Lerry Knox, "The memorandum between SIG and BD Finance lays the framework for our collaboration."

Benjamin Levine, Vice President of SIG, said in the event the memorandum is the beginning of a worthy endeavour – one that will support Bangladesh's economic growth for years to come.

Thanking Shahidul Islam, the Bangladeshi Ambassador to the USA, BD Finance Chairman Manwar Hossain said the ceremony was a "historic event for the banking and financial sector of Bangladesh and the largest foreign investment effort by a financial institution in Bangladesh."

"This is our way of celebrating 50 years of Bangladesh's independence, working hard and excelling in what we are supposed to do."

Manwar further said, "We are committed to making lending very competitive and borrowing very affordable."

Hossain also assured BD Finance shareholders saying, "This is no ordinary step, no ordinary partnership, and no ordinary set of people. We will always remain ahead of competition and remain committed to maximising your wealth."

Anwar Group of Industries' Deputy Managing Director Waeez Hossain said he met the top SIG officials during an alumni lecture at Georgetown University and later came up with the collaboration to help strengthen the foundation of Bangladesh's infrastructure, to remain and compete on a global scale.

"I hope relationships like these can be a model for our competitors in Bangladesh, to support the ever-increasing requirements of the Bangladesh industrial sector."

SIG and its preferred sectors

The SIG is a global structured financing company that works with project sponsors, development finance institutions, and also the national and local governments in originating and structuring infrastructure investments in growth markets.

According to the memorandum, the firm would look for financing the Bangladesh government's projects, export processing zone projects, public private partnership projects.

Since the SIG preferences are consistent with the United Nations' Sustainable Development Goals, the firm in collaboration with BD Finance would prefer investment opportunities in the fields of agribusiness and food security, education, energy, financial institutions, healthcare and hospitals, ICT, industrial and manufacturing, transports, urban developments, water and sanitation, regional cooperation and integration, according to the joint statement.