Beximco Sukuk IPO subscription starts 17 August

Beximco Limited has set from 17-23 August for the initial public offering (IPO) subscription for the country's largest private Sukuk bond.

The company also fixed from 25 July to 26 August for the subscription by its existing shareholders. To entitle the shareholders, 19 July has been set for the record date.

On 31 August, all units will be handed over to investors, according to sources in the Bangladesh Securities and Exchange Commission (BSEC).

The listed company will privately place Sukuk units worth Tk2,250 crore, of which Tk750 crore will be offered to the company's existing shareholders, and Tk1,500 crore to other investors. Besides, Sukuk units worth Tk750 crore would be floated in an IPO.

The Sukuk units having a face value of Tk100 each will have to be subscribed in a lot of 50 units or multiples that would amount to at least Tk5,000.

Earlier, the company secured the regulatory approval to originate its Tk3,000 crore Sukuk, Islamic asset-backed securities.

BSEC officials said the Sukuk would be a green one as the company would spend the money on eco-friendly infrastructures.

Beximco Limited would expand its textile unit alongside implementing two solar power projects under its power division with the Sukuk money.

Investment Corporation of Bangladesh is the trustee of the Sukuk, while City Bank Capital Resources Ltd and Agrani Equity and Investment Ltd are jointly working as issue managers.

The base rate of the Sukuk was set at 9%, which means investors would be getting a 9% secured annual return.

The margin was set at 10% of the difference between the base rate and the annual dividend that Beximco will pay in a specific year.

The margin would be added to the base rate if Beximco's dividend for the specific year surpasses the base rate. If the dividend is lower than the base rate, there would be no negative margin.

Investors can gradually convert their Sukuk to Beximco shares over its five-year tenure, but they can convert a maximum of 20% of the total in a year.

Unexercised options to convert in a year can be exercised in the following year as well, along with the current year's option.

If someone does not convert, they will get the principal back after the fifth year.