Runner to issue Tk265cr bond to fuel three-wheeler business

Infographic: TBS

Runner Automobiles will raise $25 million, equivalent to around Tk265 crore, through issuing a non-convertible guaranteed bond to fuel its eco-friendly three-wheeler business, according to a disclosure through the Dhaka Stock Exchange (DSE).

The money would be utilised partly to set up a rooftop solar power system for its three-wheeler manufacturing facility, and the rest of the amount would be used to augment the customer base for its liquefied petroleum gas (LPG) and compressed natural gas (CNG)-run three-wheelers as well as the electric ones through credit sales.

The taka-denominated bond will be guaranteed by GuarantCo, and will have the first ever Moody's sustainability certification for any Bangladeshi company, said Runner's Chief Financial Officer (CFO) Shanat Datta.

Three-wheeler is Runner's most winning segment at this moment, having a huge growth potential, Datta said, adding that was why the company eyes investing more in its newest business unit—a Tk300 crore Bajaj three-wheeler manufacturing plant capable of making 30,000 units a year, even higher than the entire market demand right now.

The plant was inaugurated at its Bhaluka, Mymensingh, and factory complex in February, and the maiden locally manufactured gas-run three-wheeler units have already hit the market. The demand is much higher than what the company is delivering right now.

The import of raw materials and parts has been a big challenge due to the national dollar conservation drives, said Datta.

The 4 MW rooftop solar power system, in which the company planned to invest around 10% of the bond proceeds, would make the manufacturing plant a green one and help reduce electricity bills, he added.

Runner Automobiles, which pioneered local manufacturing of motorcycles a decade ago, also championed direct credit sales to users on a monthly instalment basis, and the company ascended to the second spot in the Bangladesh two-wheeler market in 2014, much before its competitor brands built their local factories to avail the tax and duty benefits offered against localization of production.

Shanat Datta believes that, having the LC problems resolved, credit sales would enable the company to sell three-wheelers to a large number of hardworking, low-income drivers, most of whom are unable to invest the total sum of Tk5 lakh at a time and end up hiring one from an affluent three-wheeler owner.

Runner's three-wheeler principal Mumbai-based Bajaj Auto, the world's largest three-wheeler manufacturer, has already launched its electric three-wheeler in India, and Runner plans to launch it in Bangladesh by the middle of the year.

"Initially, we will test the market with imported electric three-wheeler units, and our state-of-the-art manufacturing facility is capable of starting local manufacturing by early next year," said Runner CFO.

"Runner Auto Internationally Certified Sustainability Bond" will be issued for seven years, and investors will get an 8.5% to 9% return a year.

Local investment bank GreenDelta Capital will be the lead arranger and advisor to the bond issuance, while DBH Finance PLC will be the trustee.

The bond will be privately placed among investors.

Runner Automobiles shares having a face value of Tk10 apiece were stuck at the floor price of Tk48.4 on Thursday as the company incurred quarterly losses until March due to the depreciation of the taka and a slowdown in two-wheeler and truck sales.