GuarantCo guarantees BDT 2.6 billion (USD 24 million) domestic bond issuance by PRAN Agro to finance its expansion plans

  • Date written
  • September, 2023

GuarantCo guarantees BDT 2.6 billion (USD 24 million) domestic bond issuance by PRAN Agro to finance its expansion plans

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided PRAN Agro, one of the leading agro-processing companies in Bangladesh and a sister company of PRAN RFL Group, with a partial credit guarantee to support a BDT 2.6 billion (c. USD 24 million) onshore bond with an eight-year tenor to attract domestic institutional capital from Bangladesh. The bond proceeds will allow PRAN Agro to finance its infrastructure expansion plans. This is GuarantCo’s second transaction with PRAN Agro.

The proceeds from the GuarantCo guaranteed bond will enable PRAN Agro to finance the second part of PRAN Agro’s expansion plan to increase its production capacity, in response to increased demand for its products and the potential for increased exports. The project includes the construction of additional factory buildings and the purchase of machinery for five product categories: noodles, confectionary, culinary, cooking oil and bakery products.

The transaction is expected to provide around 240 new contract farmers with a reliable source of income and will create 150 short term jobs, and 280 operations and maintenance jobs of which around 60 percent will be for women.

Two years ago, with the support of a 100 percent guarantee from GuarantCo and subscription by MetLife Bangladesh, PRAN Agro successfully issued its first onshore bond. The bond was the first to be listed on the newly formed Alternative Trading Board (ATB) initiated by Dhaka Stock Exchange.* This second, partial guaranteed, transaction further demonstrates the viability of trading corporate bonds on the secondary market through the ATB. In doing so, it is expected that these instruments will be replicated in the future, leading to a meaningful impact on the efficiency of the corporate bond market in Bangladesh.

GuarantCo’s partnership with MetLife Bangladesh, as the sole investor in both transactions, has been instrumental in working with various stakeholders and regulators to execute the transaction that will have a transformational impact on the development of the debt capital market in Bangladesh. Green Delta Capital acted as the trustee and security agent on the transaction.

Layth Al-Falaki, CEO at GuarantCo, said:

“We are delighted to have closed our second transaction with PRAN Agro and our fourth deal in Bangladesh which will further develop the country’s bond market. In May 2021, we provided PRAN Agro with a guarantee for a BDT 2.1 billion (c. USD 25 million) onshore bond to attract domestic institutional capital from Bangladesh and support the company’s expansion plans. This was one of the first corporate bonds in the country and has proven to have had a demonstration effect that further supports the development of the debt capital markets to the benefit of the economy and the Bangladeshi people.” 

Uzma Chowdhury, Finance Director at PRAN Agro, said:

“There is a huge demand for agro-processed food products in overseas markets manufactured by PRAN. This financing solution will help us to build up the required capacity to meet the increasing demand in different export markets all over the globe.”      

Ala Ahmad, CEO at Metlife Bangladesh, said:

“MetLife Bangladesh’s total investment in the country’s financial sector exceeds BDT 170 billion and we continue to seek investment opportunities that strengthen our financial business capability in serving customers and contribute to the country’s overall economic development. We are pleased to investment in this new PRAN Agro bond as part of our commitment to supporting the success of local businesses and communities.” 

Md. Rafiqul Islam, MD and CEO at Green Delta Capital Limited, said:

“Green Delta Capital Limited proudly stands as trustee and security agent once again for PRAN Agro bond II, the second successful venture of its kind. Our dual role reflects our unwavering commitment to facilitating growth and security. With GuarantCo’s backing, this bond not only benefits investors but also bolsters PRAN Agro’s expansion. We continue to drive financial excellence through partnerships that advance economic progress.”

NOTES TO EDITORS

About GuarantCo

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. Since 2005, GuarantCo has enabling USD 6.2 billion of total investment and USD 5.2 billion of private sector investment, giving 45.2 million people improved access to infrastructure and creating around 229,000 jobs. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com

 

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity and urgency.

PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing.

Since 2002, PIDG has supported 211 infrastructure projects to financial close, which provided an estimated 222 million people with access to new or improved infrastructure. PIDG is funded by the governments of 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 agriculture 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 hundreds of items from spices, candies, sauces, cereal bars, mustard oil, pickles, jam-jellies, etc www.pranfoods.net

About Metlife

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 individual and institutional customers build a more confident future. 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. For more information, visit www.metlife.com.

About Green Delta Capital

Green Delta Capital, a subsidiary of Green Delta Insurance Company, embarked its journey in 2011 with the vision to provide one-stop investment banking services in Bangladesh. The company’s prime focus is offering services pertaining to strategic advisory, raising debt and capital and delivering risk management solutions to its corporate and retail clients. Green Delta Capita’s vision centres on catalysing positive change through innovative financial solutions that promote sustainable development and foster a thriving planet for generations to come. The company is the first merchant bank in Bangladesh to arrange Sustainability Bond with certification from Moody’s Investors Service Singapore www.greendeltacapital.com