DSE asked to investigate BD Finance’s MOU with foreign investor

Publish: 7:43 PM, December 7, 2021 | Update: 7:43:PM, December 7, 2021

The Bangladesh Securities and Exchange Commission (BSEC) has asked the Dhaka Stock Exchange (DSE) to investigate the financial impact of the price sensitive information by Bangladesh Finance regarding its memorandum of understanding (MOU) with US investor Sovereign Investment Group (SIG).

Receiving the letter on Sunday, the DSE has already formed a three-member committee to look into the matter and it is working to submit a report to the BSEC by seven days, confirmed DSE Chief Operating Officer (COO) M. Shaifur Rahman Mazumdar.

The bourse already sent a letter to the listed non-bank financial institution (NBFI) on Tuesday asking for a of the MOU signed in the Bangladesh Embassy in Washington DC in April, the details of the foreign firm, and the development in the matters of the MOU till date.

SIG signed its MOU with Bangladesh Finance on 8 April this year with a view to invest a tentative $2billion in Bangladesh in 2 years.

The MOU included three modalities of possible investments—buying BD Finance shares from the secondary market for a seat into BD Finance board, lending BD Finance $40 million mainly to strengthen its sustainability financing portfolio, and arranging much bigger investments from the US and international market for Bangladeshi projects where BD Finance’s structured finance team would work as the local partner of SIG.

Being asked about the development, Bangladesh Finance Managing Director (MD) and Chief Executive Officer (CEO) Kyser Hamid told the Business Standard, the two partners are working on all three modalities and right now they are working on the legal framework for the possible cross border transactions.

The foreign investment firm would get the legal framework under formulation vetted or approved by their legal experts to ensure that it would ensure their investors’ protection here, he said. In Bangladesh, process of foreign funding to any local lender was taking avg 2 years or more, even if the financing were done by international investors like the International Finance Corporation, DEG who have office in Dhaka.

For funding from SIG which is operating from the United States of America things understandably would take some time, he added. About equity investment in BD Finance, he said, “it was an MOU, not contract. BD Finance will give them a seat in its board if they secure 4% shareholding through accumulating BD Finance shares from the bourses.”

SIG co-founders have a very rich track-record in the field of international investments and they would look for investment-worthy projects in the country to arrange financing from the US market, Hamid Said, adding that the tentative $2billion might be even bigger if local projects can attract investors and the investors are happy with the due diligence reports and the much needed regulatory ease.

SIG co-founder Larry Knox in his investment banking career of two decades in the Wall Street arranged $115 billion in infrastructure financing, Hamid said adding that Larry’s partner Adam Hitchcock, an investor and adviser, was the Chief of Staff Officer at the Obama Administration’s Council of Economic Advisers.

Hamid is hopeful that within the 10 years of the tenure of the MOU the partnership with SIG would bring a good result for the economy and his company as well.

“We are preparing ourselves best for the aimed progress,” he said adding that his structured finance team is working on more than a dozen local companies’ projects and SIG is already interested in 5-6 of those.