ACI Motors, a subsidiary of Advanced Chemical Industries (ACI) Ltd, is set to expand its motorbike and farm machinery equipment capacity after receiving Tk84 crore from three foreign financiers.
UK state-owned development financial institution Commonwealth Development Corporation (CDC), Norwegian state-owned investment fund Norfund, and Dutch development financier FMO are the foreign investors.
ACI Motors, as part of its continuous expansion in farm machinery capacity and to consolidate its market leadership, has been aiming to assemble combine harvesters.
Following the foreign investment, it is now eyeing capacity expansion, alongside setting up an assembly plant for Foton commercial vehicles.
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Foton is one of the fastest-growing Chinese brands that have a fair amount of market share in the commercial vehicle segment.
According to FH Ansarey, managing director of ACI Motors, Tk84 crore received as investment will be used as capital expenditures, while the remaining amount would be spent as working capital.
With the influx of funds, the Yamaha motorcycle manufacturing plant would also see the annual capacity go up to 1,08,000 units immediately, which will be raised to 1,40,000 units later.
The new investment will dilute ACI's shareholding in ACI Motors from 52.70% to 46.80%.
Earlier last year, FMO had invested $15 million in ACI Motors.
Norfund, CDC, and FMO have previously invested in Bangladeshi SMEs through Frontier Fund- one of the first specialized SME funds in Bangladesh.
Frontier Fund offers opportunities for the growth and development of companies in need of capital.
Norfund invested $10 million of a total of $88 million in this fund, which is managed by a Bangladeshi subsidiary of Swedish Brummer and Partners- as a local adviser to the investors.
It has been reported that the investors will get ACI Motors Limited's convertible preference shares at Tk540, where Tk440 would be the premium against the face value of Tk100.
The company will issue 15.55 lakh convertible non-cumulative preference shares worth Tk100 each at a premium of Tk440 per share.
Against the equity instrument, the investors would receive dividends as much the company's board recommends for the general shareholders, and the investors would get their preference shares converted into ordinary shares before the company goes public in the coming years.
