GuarantCo guarantees BDT 2.1 billion (c. USD 25 million) domestic bond issuance by PRAN Agro to finance expansion and grow supply chain network with local farmers
GuarantCo provided PRAN Agro, part of PRAN -RFL Group, with a 100 percent guarantee of a BDT 2.1 billion (c. USD 25 million) on-shore bond with a seven year tenor to attract domestic institutional capital from Bangladesh and support PRAN Agro’s expansion plans.
GuarantCo, a Private Infrastructure Development Group (PIDG) company, enabled a pioneering and transformational structure for the bond realising various firsts for the Bangladeshi market: the first blended finance structured bond of its kind; the first to be subscribed by an international insurance company and the country’s first directly issued digitised bond under Private Placement of Debt Securities Rules; no development finance institution has ever guaranteed a bond of this kind in Bangladesh.
GuarantCo’s partnership with MetLife and Riverstone Capital has been instrumental in working with various stakeholders and regulators to execute the transaction that will have a transformational impact on development of debt capital market in Bangladesh.
The proceeds from the bond guaranteed by GuarantCo will enable PRAN Agro’s expansion plans including land development, construction, storage facilities and processing machinery. The expansion is expected to result in over 20 percent increased sourcing from local farmers, contributing to rural income and food security which is critical during the COVID pandemic and high on the Government of Bangladesh’s agenda. In a period where many people have lost their jobs, additional investment into PRAN Agro will also provide much needed job security to both current and future employees.
In Bangladesh, one of the world’s fastest growing economies over the last decade, the agriculture sector is a key sector contributing to employment and share of GDP. A key part of PRAN Agro’s strategic plan is to meet increasing demand for processed agricultural products, both locally and overseas, and invest in both expanding its production lines and work force to grow the business in order to fuel economic growth in Bangladesh.
Emily Bushby, Interim CEO at GuarantCo, said: “We are proud to have closed our second transaction in Bangladesh and support the Government to make a contribution to the country’s growing economy and increasing demand for processing local and overseas agricultural products whilst providing employment for local people including women. Given that no Bangladeshi company has ever raised any local currency bond financing with the assistance of a DFI and that Bangladesh has only had three listed bonds in the on-shore market, GuarantCo’s transaction with PRAN Agro will have a significant demonstration effect that will support the development of the debt capital markets. It will demonstrate another source of funding for businesses seeking to raise financing for infrastructure projects from which the local people in Bangladesh will benefit. GuarantCo is proud to have worked on this landmark transaction for Bangladesh and is grateful to policy makers in Bangladesh (BSEC, Bangladesh Bank and others) to have supported us all along despite a number of unforeseen circumstances most notably brought in by COVID pandemic.”
Uzma Chowdhury, CPA Director Finance at PRAN Agro, said “With the issue of this bond, PRAN Agro Limited has established an alternate source of funding that can attract investors to the Bangladesh capital markets. Bangladesh, a nation of tremendous opportunity, is creating the investment opportunity with an innovative solution ensuring deeper financial markets, advancement of rural economy and enhanced sustainability. We thank our partners including BSEC, Bangladesh Bank and all other authorities for their support in achieving this milestone in the middle of the pandemic.”
Ala Ahmad, General Manager at MetLife Bangladesh, said: “MetLife’s investment in this landmark bond is testament to our confidence in the growth potential of Bangladeshi companies as well as MetLife’s unique expertise in advanced investment and portfolio management.”
In April 2019, GuarantCo launched the findings of its Study of Bangladesh Bond Market at the Local Capital Market Infrastructure Financing Conference, co-hosted with the Dhaka Chamber of Commerce & Industry (DCCI) and attended by Mr. Salman F. Rahman, MP, Honourable Private Industry and Investment Adviser to the Prime Minister. The Bond Study, funded by PIDG Technical Assistance, was commissioned by GuarantCo to assess the challenges relating to an active bond market for infrastructure projects and to identify possible interventions that will enable the development of a vibrant bond market in Bangladesh.
After the financial close of the Technaf Solar Power transaction in May 2019, this is the second deal that GuarantCo achieved in Bangladesh.
GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development. www.guarantco.com
The Private Infrastructure Development Group (PIDG) is an innovative infrastructure development and finance organisation which encourages and mobilises private investment in pioneering infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia to promote economic development and combat poverty. PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 171 infrastructure projects to financial close which provided an estimated 223 million people with access to new or improved infrastructure. PIDG is funded by six governments (the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany) and the IFC. www.pidg.org
About PRAN Agro
PRAN Agro Limited, a sister concern of PRAN-RFL group registered in 1999 under the Companies Act in Bangladesh for processing agro-produce items into packed food items by increasing shelf life of the produce. It is the largest player in the local market for culinary items which producing 100s of items from spices, candies, sauces, cereal bars, mustard oil, pickles, jam-jellies, etc www.pranfoods.net
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (MetLife), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help its individual and institutional customers navigate their changing world. Founded in 1868, MetLife has operations in more than 40 markets globally and holds leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. www.metlife.com
MetLife Bangladesh is the leading international life insurer in the country serving over a million customers in Bangladesh. www.metlife.com.bd