- Date written
- September, 2023
- Contact for guarantco
- Marjolein van Kampen
- Communications Director
- +44 (0)738 8857097
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.”