The British International Investment (BII), formerly known as the Commonwealth Development Corporation, has committed $450 million to invest in Bangladesh's private sector in the next four-five years, said Nick O'Donohoe, chief executive officer of the UK government's Development Financing Institution.
"Bangladesh is an important destination for British investments," he said in an interview with The Business Standard at the British High Commission on Tuesday.
"We focus on countries having a strategic alliance with the United Kingdom, with ongoing development challenges, and ideally, having a stable government and stable economic policies, all of which are present here in Bangladesh."
Since Bangladesh recognises the importance of the private sector in economic development and BII finances development through debt and equity investments only in private firms, its balance sheet here in the country has grown to nearly $300mn, he added.
Currently, the BII is aiming to retain its investments already made in Bangladesh.
The committed fund for the next five years in Bangladesh accounts to over 4% of its global total.
Following a 2019 Dhaka visit by the entire board of directors of the then Commonwealth Development Corporation, the Development Financing Institution (DFI) has already built its local office and team here.
Speaking on BII's priority sectors for investment, Nick O'Donohoe said that in line with the British government's commitment to climate finance, his firm puts green financing at a top spot, committing nearly one-third of its fund.
The BII would fulfil its climate commitment through investing in green factories and projects, said its CEO.
Infrastructure, manufacturing, healthcare, technology and financial sectors are the major areas of BII's interest, while it keeps green transformation, digital transformation, job creation, import substitution and trade facilitation in mind during investments.
O'Donohoe also pointed out that while the BII invests a lot in renewables in many other countries, the potential for wind and solar power in Bangladesh was less.
He further said that Bangladesh could attract more foreign direct investments through better focusing its digital transformation.
In the peer countries in terms of population, development issues, he said he saw a clearer picture of their digital transformation along with obvious support which was lacking in Bangladesh.
"You have a scalable market and trained computer programmers," he said, adding that if Bangladesh becomes more active in digital transformation BII would find more investment opportunities in the tech arena.
India has taken tech to a different level, which is possible for Bangladesh too, he said.
"We have venture capital funds in Nairobi, Cape Town, Lagos, Karachi, and Mumbai, but not in Dhaka," O'Donohoe also said.
BII's Country Director M Rehan Rashid said its foreign currency debt to three commercial banks significantly added to their foreign trade financing capacity, while the investor also focuses on climate and SME financing through its exposure in the country's financial sector.
BII, as a fund of funds, has also invested in the Evercare Hospital in Dhaka.
The BII believes that Bangladesh's manufacturing sector has a potential to widen its horizon to solar manufacturing, electronics industry and many others, following the leadership of apparel exporters who made the country the home to the maximum number of green textile factories, while pharmaceutical plants are also being recognised for their standard.
Being well aware of the ongoing reforms in Bangladesh for investment facilitation, the BII bosses said they read about the challenges and the need for process simplification in newspapers.
As bright spots to Bangladesh's story, they mentioned local firms' access to low cost funds, reliable energy, improving connectivity and the upcoming factories in the special economic zones.
Since BII believes in transformation through the private sector, it looks for good companies having good governance and climate sustainability standards to invest in.
"Companies ensuring good governance and sustainability standards get better prices from investors as globally investors are in search of such firms," said Rehan Rashid.
Most of the Leed-certified factories are in the apparel and pharmaceutical sectors, which, he believes, is because of the fact that they deal with the global stakeholders.
"The standards should be replicated in other sectors too," said the BII country director.
BII is headquartered in London, the oldest development finance organisation. It tends to promote countries where it invests its funds and commercial investors also follow, because of the investment criteria and due diligence BII follows.