Renata secures BSEC nod to raise Tk325cr through preference shares

Renata Limited, a leading pharmaceutical company, has received approval from the securities regulator to raise Tk325 crore by issuing fully convertible preference shares, aiming to partially repay its outstanding loans and borrowings.

Fully Convertible Preference Shares (FCPS) are a type of preference shares that can be fully converted into common (equity) shares of a company after a specified period or upon meeting certain conditions.

In a stock exchange filing yesterday (27 July), Renata said the Bangladesh Securities and Exchange Commission (BSEC) has approved its preference share issuance, with a three-month validity to raise the funds as per the consent letter.

Eight months ago, in November, the drug maker announced plans to raise Tk325 crore through redeemable, cumulative, non-convertible, and non-participative preference shares.

Later, Renata revised its preference shares nature to non-cumulative, non-participative, fully convertible on 18 January in its board of directors meeting.

According to sources, the preference shares have a six-year tenure, with conversion to Renata's equity beginning in the third year at a rate of 25% annually over the following four years.

Jubayer Alam, company secretary of Renata, told TBS, "The raised funds will be used to pay off the company's short-term borrowings, especially in light of the rising interest rates in the banking sector."

"If a portion of these loans is repaid, the company's profitability will improve, as a significant amount of financial expenses is currently being borne by the company," he added.

He said, "As the shares are to be converted into common shares of the company, the company will not need to repay the money, but preference shareholders will receive the company's shares."

According to its third-quarter financial statement, Renata has taken around Tk1,900 crore loans — Tk1224 crore short-term and Tk675 crore long-term – from several banks as of March 2025.

Its short-term loan was Tk1,083 crore in the same period of the previous year at the end of March 2024.

The Renata disclosure reads, the regulator allowed the issuance of preference shares to raise the funds, which is subject to approval from the shareholders in an extraordinary general meeting (EGM).

"In light of this development, the board will convene an immediate meeting to finalise and approve the record date for eligibility of shareholders to attend the EGM and apply for the aforementioned preference shares," it stated.

"Upon determination, the record date will be published in two widely circulated newspapers (one in Bengali and one in English), in compliance with applicable rules and regulations, and will also duly notify the exchange of the outcome of the board Meeting and provide all relevant disclosures in a timely manner," the disclosure added.

All preference shares issued to directors and individuals holding 5% or more will be subject to a three-year lock-in period from the date of allotment, while for all other shareholders, the lock-in period will be one year.

According to the BSEC consent letter, Renata's sponsor-directors must individually hold at least 2% of shares and jointly maintain a minimum of 30% of the company's paid-up capital after the preference shares are converted into equity.

In March last year, the BSEC approved Renata's plan to raise Tk350 crore through preference shares via private placement for a five-year term. Earlier that year, in January, the regulator had also permitted the company to issue a Tk660 crore zero-coupon bond.

Renata reported a 13.20% revenue growth in FY25 first nine months 

This growth was primarily driven by increased demand volume, while the prices of pharmaceutical products remained unchanged.

While its pharmaceuticals' revenue grew by 15.5%, animal health and contract manufacturing declined by 19.6% and 31.9%, respectively, according to its unaudited financial statement. Also, its export revenue grew by 22.5% across 57 countries. 

However, despite the growth in revenue and exports, its net year-on-year profit declined by 30.5% to Tk183.9 crore, down from Tk263.2 crore in the same period of the previous fiscal year. Its net finance costs surged by 56% to Tk124.82 crore.

According to its commentary on its quarterly financials, Renata said its profit decreased due to a significant growth in finance costs driven by both the rise in the cost of debt and the increase in debt incurred for ongoing expansion plans. 

The firm expects the expansion to be completed later this year, thereafter contributing to additional capacity, underpinning our preparedness for additional sales growth.

Renata said during the year to date, it invested Tk300 crore in capital expenditure to bring in place the Kashor FG & RM Robotic Warehouse and General Facility, Hobirbari Potent Product Facility, Rajendrapur R&D Lab, Oncology Solid Facility extension, etc.

Meanwhile, the drug maker earned over Tk1,064 crore during the January to March period, which is 15% up from Tk921 crore in the same time of the previous fiscal year. 

Despite its revenue growth, its profit fell by 22.87% to Tk55.62 compared to the same time of the previous fiscal year.