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Dhaka Tribune

New private investment model for RMG

Update : 04 May 2014, 07:42 PM

A New York-based investment fund formally launched operations in Bangladesh on Sunday with a mandate to invest in apparel and textile factories.

The firm, Tau Investment Management, has specially set up a fund for investors to invest directly into partnerships with factories, with the goal of improving supply chains. The fund invests in producers in emerging markets, with the aim of delivering better returns, by improving the financial, social and environmental performance of the factories in which they invest.

This is a potentially valuable approach to funding RMG improvements. If successfully implemented, it can start a virtuous cycle and open the door to larger sources of funding from international institutional investors.

Bangladesh’s RMG industry needs substantial long-term investment to modernise and build new factories.  New sources of capital to fund improvements and help raise standards are to be encouraged.

The firm has been attracting significant private equity interest, by pointing out the value that can be added by improving productivity and making safety, social and environmental improvements. In its launch release, the firm announced a number of specific improvement goals for safety standards and targets for reducing greenhouse emissions and costs by improving energy efficiency.

Reports indicate the firm plans to raise $1bn worldwide and make a significant portion of its investments in Bangladesh over the next three years.

This type of interest by international investors is an encouraging indicator of long-term value in the RMG industry. We hope it can inspire others to do likewise.

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