Nagad, the mobile financial services arm of the Bangladesh Postal Department, is set to raise Tk500 crore by issuing zero-coupon bonds with an aggregate face value of Tk750 crore at maturity in five years.
In a press statement on Tuesday, Nagad said that as the fastest growing mobile money company in the world, it will use the proceeds from the bond subscription for future readiness of the company's digital infrastructure, marketing, promotional activities, and for working capital financing.
If approved by the regulators, this would be the first-ever bond issuance by a mobile financial services provider in Bangladesh.
The announcement of the landmark issue was made on Monday in New York at an investor show, "The Rise of Bengal Tiger: Potentials of Trade & Investment in Bangladesh", organised by the Bangladesh Securities and Exchange Commission (BSEC).
Nagad, a key partner of the event, has received initial approval from the BSEC for issuing the bond.
The company said many foreign investors have already shown keen interest since the announcement of the bond.
Reportedly, Kiu Global, a US-based digital services company, has already expressed interest in subscribing to the bond for a BDT amount equivalent to $30 million.
Local investment bank Riverstone Capital is acting as the arranger of the bond wherein Green Delta Capital will be the trustee.
"With the development of the capital market in Bangladesh, the bond market has also become vibrant in the recent past. We consider this as a better source to raise investment. Moreover, Nagad has always been innovative and that is why we chose the bond market over traditional financing," said Tanvir A Mishuk, managing director and co-founder of Nagad.
"Nagad is a fast-growing company that achieved 53 million customers within just two years and a quarter. To keep the growth momentum, it's essential to build a new digital ecosystem and infrastructure. As a state-owned entity, we have to put our efforts to reach the vision of a Digital Bangladesh. With this investment, we will enhance the digital ecosystem that will help us cater to more people with innovative services and eventually that will be helpful to achieve the goal of a Digital Bangladesh."
"BSEC, in collaboration with our ecosystem of regulators and stakeholders, is working towards the development of Bangladesh's capital markets, particularly the debt market, which will be vital for financing the long-term needs of our industries and infrastructure," said Professor Shibli Rubayat-Ul-Islam, chairman of BSEC.
"We hope Nagad's issue will encourage greater participation of our leading corporates, state-owned enterprises, and municipalities in the debt capital space, devising optimal financing strategies that will help them grow and prosper sustainably. Nagad's initiative of issuing its first corporate bond is commendable and will contribute towards setting a right direction for the capital market."
Nagad, a change-maker in the government's safety-net disbursement dynamics of Bangladesh, was launched by Prime Minister Sheikh Hasina, its commercial operations commencing on 26 March 2019, with a vision to financially include all walks of life and upgrade them on a digital platform.
Salman Fazlur Rahman MP, private industry and investment adviser to the prime minister, Abdur Rouf Talukder, senior secretary to the Finance Division under the Ministry of Finance, Professor Shibli Rubayat-Ul-Islam, Tapan Kanti Ghosh, secretary to the Ministry of Commerce, Md Sirazul Islam, executive chairman of Bangladesh Investment Development Authority (Bida), Major General Md Nazrul Islam, executive chairman of Bangladesh Export Processing Zones Authority (Bepza), and Steven Landman, chief executive officer of Kiu Global, were also present at the declaration event in New York alongside other high-level delegates from Bangladesh.
BSEC has organised this investment roadshow with a view to showcasing the strength and opportunities of business and investment in Bangladesh for foreign investors.
High-level delegates from Bangladesh and the US, along with other business conglomerates and investors, are attending different seminars in New York, Washington DC, Los Angeles (California), and Silicon Valley (Santa Clara).