GuarantCo provides Runner Automobiles with a guarantee for BDT 2.67 billion (c. USD 27 million) to support the first internationally certified sustainability bond in Bangladesh

  • Date written
  • August, 2023

GuarantCo provides Runner Automobiles with a guarantee for BDT 2.67 billion

GuarantCo, part of the Private Infrastructure Development Group (PIDG), provides Runner Automobiles with a 100 percent guarantee for issuance of an internationally certified sustainability bond worth BDT 2.67 billion (c. USD 27 million). The bond aims to facilitate access to credit for borrowers who wish to own lower emitting three-wheelers including electric powered three-wheelers. Furthermore, a proportion of the bond’s proceeds will be allocated towards installing a 3.4MW greenfield rooftop solar system at the manufacturing plant.

This landmark achievement represents the first internationally certified sustainability bond issued by a local business in Bangladesh. The bond garnered subscriptions from local private sector institutions and insurance companies. MetLife Bangladesh is a major investor in this bond whilst Green Delta Capital acted as the lead arranger and security agent on the transaction.

By providing credit access, this initiative will grant an opportunity for around 7,000 drivers to become owners of three-wheelers, leading to income-generating prospects for drivers and downstream vehicle maintenance companies. It is anticipated that these three-wheelers will offer taxi services to approximately 50,000 people in rural and urban areas of Bangladesh.

In addition to making an employment generating product more affordable for lower-income consumers in the country, the transaction is also Paris aligned as it will facilitate the implementation of the Government of Bangladesh’s transport and climate strategy. Furthermore, the rooftop solar facility installed as a component of the transaction will significantly reduce reliance on grid and backup diesel generators, lowering the carbon footprint, and the three-wheel vehicles backed by the transaction represent an environmental improvement compared to other vehicles relying on other fossil fuels.

Layth Al-Falaki, CEO of GuarantCo, said:

“We are delighted to have closed our third transaction in Bangladesh which will further develop the country’s bond market. The transaction will make a direct contribution to SDG 11a which seeks to improve economic and social links between urban, peri-urban and rural areas and SDG 8.5 which aims to achieve full and productive employment and decent work for all women and men.”

Subir Kumar Chowdhury, CEO of Runner Automobiles PLC, said:

“Since inception, Runner Automobiles PLC has endeavoured to introduce advanced and environment-friendly technologies to the automobile industry of Bangladesh and create a sustainable impact in the transportation sector.  Like 2-wheeler manufacturing, Runner has also pioneered the local manufacturing of world-renowned Bajaj 3-Wheeler in its state-of-the-art automobile manufacturing plant in Bhaluka, Mymensingh. To expand this eco-friendly mobility solution, Runner has joined hands with GuarantCo for issuance of a sustainability bond worth BDT 2.67 billion, the first ever internationally certified bond in Bangladesh. Under the scheme, Runner will extend credit to its customers to facilitate purchase of the eco-friendly CNG/LPG and Electric 3-Wheeler that will generate self-employment for thousands of people to earn living for their families. A portion from the fund will be spent to install a 3.4MW greenfield rooftop solar system at the Runner’s automobile manufacturing plant.”

Ala Ahmad, Chief Executive Officer of Metlife Bangladesh, said:

“Our investments in Bangladesh continues to grow and we are proud to be a partner in launching the country’s first sustainability bond. This landmark investment demonstrates our confidence in the growth and prosperity of Bangladesh and its potential to become a more developed financial market.” 

Md. Rafiqul Islam, Managing Director and CEO of Green Delta Capital Limited, said:

“Being the lead arranger and advisor on the transaction, I would like to thank everyone for successful closure of the deal. I am thrilled and at the same time proud of the fact that we have achieved a new milestone by bringing a sustainability bond in Bangladesh. With this issuance, we are not only contributing our dedication to addressing global challenges but also leveraging our businesses for positive change. This is not just a financial transaction, it is a testament to our purpose-driven approach and an opportunity to make a meaningful difference.“

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 Runner Automobiles

Runner Automobiles PLC (RAPLC), established in 2000, has emerged as the flagship company of Runner Group and a leading automobile conglomerate having state of the art facilities for 2-Wheeler and 3-Wheeler manufacturing in Bangladesh. RAPLC is the company that pioneered manufacturing of both 2-wheelers and 3-wheelers in Bangladesh, and it is also the first company to export motorcycles from Bangladesh to countries like Nepal and Bhutan. The plant is capable to produce 100,000 motorbikes and 30,000 3-Wheelers. Runner Automobiles and its different concerns/subsidiaries have the authorized distributorship businesses of several international brands such as KTM, Vespa, Aprilia, Volvo Eicher commercial trucks, Iveco, Iveco Defence Vehicles, Dynapac, Liebherr, Servo etc. www.runnerbd.com.

About Metlife Bangladesh

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. www.metlife.com.

About Green Delta Capital

Green Delta Capital Limited (GDCL), a subsidiary of Green Delta Insurance Company Limited, 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 & capital and delivering risk management solutions to its corporate and retail clients. GDCL 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 Pte. Ltd . www.greendeltacapital.com