BSEC gives go-ahead to issue Tk600cr Bonds for Trust Bank, IPDC as part of effort to boost capital market ahead of election
The Investment Corporation of Bangladesh (ICB) is to reinvest at least 75% or Tk1,500 crore from the issuance of bonds in the capital market ahead of the upcoming parliamentary election.
A senior ICB official told Dhaka Tribune that the government is seeking a turnaround in the market ahead of the poll, which is expected in December.
“The fund to be collected through issuance of bonds will bolster the paid-up capital base of the ICB, while the investment of Tk1,500 crore in the share market will help generate fresh funds in the market,” he said.
The decision to shore-up the capital market ahead of the crunch polls was taken at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) on Thursday presided over by its chairman M Khairul Hossain.
It follows the approval by the BSEC on July 17 of a ICB proposal to float non-convertible fixed rate subordinated bonds worth Tk2,000 crore.
Thursday’s meeting also approved a proposal of Trust Bank to issue seven-year subordinated bonds worth Tk500 crore, and Tk100 crore subordinated bonds for IPDC redeemable in five years, sources present said.
The face value of each unit of both bonds has been fixed at Tk1 crore.
Only corporate bodies, financial institutions, eligible investors and mutual funds will be allowed to subscribe the bonds through the private placements.
Sources at the ICB said their institution has recently been plagued with capital deficit after investing Tk355 crore in the beleaguered Farmers Bank in February, and for exempting Tk183 crore margin loans of affected small share market investors in April.
A statement from the BSEC said Trust Bank and IPDC will strengthen their Tier II Capital Base requirements by raising capital through the issuance of the bonds.
EBL Investment Limited is the trustee and City Bank Capital Resources Limited is the mandated lead arranger of IPDC’s bond, while Sena Kalyan Insurance Company is the trustee and Standard Chartered Bank is the mandated lead arranger of Trust Bank’s bond.
Also at Thursday’s meeting, the BSEC approved the prospectus of an open-ended mutual fund - Vanguard AML Growth Fund - with an initial target size of Tk10 crore.
Of the target size, sponsor-directors will provide Tk1 crore, while the remaining Tk9 crore will be collected from general investors by selling its units.
ICB acts as trustee and custodian of the fund while Vanguard Asset Management Company Limited is its asset management company.