Investors shy away from converting sukuk into Beximco shares

Four years after the launch of Bangladesh's first asset-backed corporate green sukuk, investors have largely avoided converting their Beximco Green-Sukuk Al Istisna'a units into shares, deepening concerns over the group's ability to repay the instrument on maturity in 2026.

Despite the option to convert 20% of units annually, total conversion reached only about 6.36% over four years up to 2025, with just 350 units converted into 420 Beximco shares in 2025, according to trustee Investment Corporation of Bangladesh (ICB).

Conversion in 2025 was the lowest among the four years, whereas the highest conversion took place in 2022, with 1.7 crore sukuk units converted into shares. 

According to trustee data, as of the record date on 22 December, 17 sukuk holders applied to convert 20% of their holdings, while one sukuk holder applied to convert 80% of its holdings in the fourth year.

The applicants collectively held 640 sukuk units, of which 350 units were converted into 420 ordinary shares of Beximco Limited at a cost price of Tk82.58.

After the conversion process, total remaining sukuk units stood at 28.09 crore by the end of 2025, the data showed.

ICB officials said currently, due to the imposition of a floor price on Beximco's shares, the price is stuck at Tk110.10 each. 

Sukuk investors fear that if the floor price is lifted, the share price may decline significantly, as Beximco Ltd remains largely non-functional, having closed its garments division in Gazipur and partially operating its textile division, they said.

As a result, the company's revenue and profitability suffered after the fall of the previous government last year, said the officials.

Therefore, investors prefer to retain their sukuk units rather than convert them into shares, as they continue to receive half-yearly periodic interest on their sukuk investments, they added.

So, upon maturity of the sukuk in December 2026, Beximco, the sukuk originator, will be obligated to repay the entire amount to investors.

But lack of capacity to repay the whole amount within a year, as Beximco is now in trouble, a Bangladesh Bank-mandated working committee has recently recommended extending the maturity of Sukuk by six years.

The 21-member committee, led by the ICB has proposed a new maturity date of 2032 for the Tk3,000-crore instrument.

The extension has been sought amid Beximco's ongoing financial strain, delays in two of the three Sukuk-funded projects, and the company's failure to convert Sukuk units into its shares as originally planned.

Beximco raised Tk3,000 crore in 2021 through the country's first private-sector, asset-backed corporate green Sukuk.

The plan for Sukuk was to finance two solar power plants – Teesta and Korotoa – alongside the expansion of Beximco's textile division.

Only Teesta Solar Plant is functional, and Korotoa plant, with a planned 30MW capacity is non-functional. was expected to begin production by June 2026, as the plant was damaged due to a fire in August 2024.

Meanwhile, Beximco has yet to publish its nine-month and full-year financial statements for the 2024-25 fiscal year. Its six-month financials up to December 2024 showed revenue plunging to Tk415 crore, down sharply from Tk1,441 crore in the same period of the previous fiscal year. The company posted a loss of Tk356 crore, with a per-share loss of Tk3.78.

In FY24, Beximco incurred a loss of Tk35.87 and did not declare any dividends for shareholders.