Why Navana Pharma fails to raise fund through bond

Infographic: TBS

Navana Pharmaceuticals Limited has decided to repay its subscribed portion of a planned bond earlier than maturity, after failing to secure sufficient investor participation, according to a disclosure filed on the Dhaka Stock Exchange (DSE) today (2 September).

The company had initially planned to raise Tk150 crore through a five-year bond issue, but could only manage a subscription of Tk8 crore from a single investor – Capitec Asset Management, company officials said.

The company's plan to repay the amount, however, is subject to approval from the Bangladesh Securities and Exchange Commission (BSEC). The officials said the move became necessary after the regulator refused to extend the bond subscription tenure any further.

"Due to the unrest in the country, investors were reluctant to participate in the bond. That is why we were unable to get the desired amount," said Lorens Shamol Mollick, company secretary of Navana Pharma, while speaking to TBS.

Infographic: TBS

He added that since the BSEC declined to grant further extensions of the subscription window, the company had no option but to repay the subscribed amount.

The failure marks a major setback for Navana Pharma, which had planned to use the bond proceeds to repay its high-cost loans and improve its financial flexibility.

The bond plan was first unveiled in June 2023, with approval from the securities regulator coming in November that year. The instrument was designed as a five-year bond with an interest rate tied to the six-month average bank deposit rate plus 5%. 

In a unique feature, 60% of the bond was set to be convertible into Navana Pharma shares. City Bank Capital Resources was appointed as the arranger of the bond, while Prime Bank Investment acted as trustee.

Despite these arrangements, investor participation remained weak throughout the extended subscription period. The BSEC had already extended the subscription several times, but finally drew the line in September 2024, denying any further extensions. This ultimately forced Navana Pharma to abandon its Tk150 crore fund-raising plan.

The company's financial performance during the period suggests that the lack of investor appetite was not due to weak fundamentals alone. In the first nine months of fiscal year 2024-25, Navana Pharma reported a 31% jump in sales, reaching Tk660 crore. Its net profit rose 13% to Tk37.49 crore, translating into earnings per share (EPS) of Tk3.49. Net asset value (NAV) per share stood at Tk45.32 as of March 2025, while total liabilities amounted to Tk653 crore.

Navana Pharma was listed on the DSE in 2022, raising Tk75 crore through an initial public offering (IPO) under the book building method. It issued 2.71 crore shares at Tk34 each, while general investors received them at a discounted price of Tk24 per share.

Today (2 September), its share price rose by 3.58% to Tk63.70, hitting a one-year high and pushing the company's market capitalisation to Tk684 crore. 

Investors have also received returns in the form of a 14% cash dividend for the fiscal year 2024.

However, the company's ownership and governance history has not been without turbulence. Prior to entering the capital market, shares of Navana Pharma were purchased by Anisuzzaman Chowdhury, a former director of United Commercial Bank, and his wife Imrana Zaman Chowdhury, also a former director of the bank. Anisuzzaman, who is the brother of former land minister Saifuzzaman Chowdhury, went on to become chairman of Navana Pharma, while his wife took a directorship.

Following the political regime change in August 2024, brought about by the student-led uprising that ended the Awami League's rule, both Anisuzzaman and Imrana resigned from the company's board in September that year. Their departure created vacancies, which were subsequently filled by Stratus Holdings Limited through the appointment of a nominated director.