The securities regulator has approved Al-Arafah Islami Bank Ltd to issue a Mudaraba perpetual bond worth Tk500 crore.
The shariah-based listed commercial bank will strengthen its additional Tier-1 capital base with the collected money, according to the Bangladesh Securities and Exchange Commission (BSEC).
The regulator, after its 789th commission meeting on Sunday, said this will be an unsecured contingent-convertible bond. It means its units can be converted into the issuer's equity in certain cases of under-capitalisation.
Bond investors' return will be measured based on the floating rate.
Local institutional investors and high-net-worth individuals can buy the bond units through a private placement.
Some Tk450 crore will be issued through private placement and the remaining Tk50 crore through public offering.
The coupon rate will be 6% to 10% of the bond. The minimum subscription amount of the bond regarding private placement will be Tk5 crore, and Tk5,000 for public placement.
Local merchant bank, MTB Capital Ltd, will act as the trustee of the bond, while two other investment banks – Prime Bank Investment Limited and UCB investment Ltd – are working as its arranger and issue manager.
Besides, Islami Bank Capital Management Limited is working as underwriter of the bond.
Al-Arafah Islami Bank Ltd listed on the capital market in 1998.
Out of the bank's total shares, sponsors and directors jointly hold 41.87%, institutional investors 21. 85%, foreign investors 0.58% and general investors 36.04%.