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BEXIMCO allows IPO placement amount swap for Sukuk upon signing

The Bangladesh Securities and Exchange Commission has allowed Bangladesh Export Import Company Limited to exchange the sukuk subscription amount between the IPO and the private placement if either of them remains signed.

The BSEC recently issued a declaration of consent in this context.

According to the letter of approval, every amount transferred in the private offer must be offered through a public offer and every amount withdrawn in the public offer can be brokered through a private placement.

BEXIMCO also appealed to BSEC to extend the subscription period for both the private offering and the initial public offering to September 30, although there is no room for the extension of the subscription period for Sukuk’s initial public offering according to the regulations and the letter of approval, said BSEC officials.

Former BSEC chairman Faruque Ahmed Siddique told New Age that after approving a company’s initial public offering, the regulator should not allow the company to increase the amount of its signed IPO through private placement.

If a company’s initial public offering is signed, the rules state that the lead manager of the initial public offering is responsible for resolving the problem, he said.

On July 8th, the BSEC BEXIMCO allowed the issuance of Tk 3,000 crore Sharia-compliant Sukuk.

Half of the 3,000 Tk fund will be raised through private placement and the Sukuk worth 750 crore Tk will be raised by the existing BEXIMCO shareholders.

The remaining 750 crore Tk will be raised through an IPO in accordance with the BSEC rules for public offers.

When asked, Ershad Hossain, managing director and chief executive officer of City Bank Capital Resources Limited, told New Age that any amount signed in the public offering could be raised through a private placement by Sukuk.

For example, if the public offer is signed by 10 percent, the shortfall amount would be met through a private offer and the amount would be part of the private placement and be deducted from the IPO amount, he said.

City Bank Capital Resources Limited is the Sukuk’s issuance manager.

According to the letter of approval, the amount of the public offer can also be increased if the private offer has been signed.

The subscription of Sukuk through a private offer to existing shareholders and institutional investors or high net worth individuals began on July 25th and should end on August 26th. IPO’s subscription to Sukuk began on August 16 and was scheduled to end on August 23, but the time has expired has been extended to September 6.

In order to further extend the subscription period for Sukuk’s IPO, the BSEC must consider exempting the company from the relevant regulations, BSEC officials said.

The term of the green sukuk is five years or 60 months from the date of issue.

The face value of each sukuk is Tk 100 and the minimum subscription is Tk 5,000 or 50 green sukuks.

The minimum periodic profit distribution rate is 9 percent.

Beximco Green Sukuk al Istisna’a is issued by the Beximco Green-Sukuk Trust as an asset-backed Shariah-compliant security and the proceeds from the subscription will be used for solar projects by Teesta Solar Ltd and Korotoa Solar Ltd.

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