As the exposure is spread across 22 public and private banks, including several of their subsidiaries, it has raised concerns about a potential increase in classified investments across the financial sector if the repayment crisis leads to a default
TBS Illustration
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TBS Illustration
Highlights:
- Beximco’s Tk2,800 crore Green Sukuk faces repayment deadline in December.
- ICB lacks legal grounds to declare default while yield payments continue.
- Twenty-two banks face potential losses if repayment fails.
- Foreign investors Revival Global and Adsum Capital have expressed interest.
- Beximco opposes Adsum’s proposed acquisition of the Teesta Solar project.
- Beximco’s financial crisis threatens investor confidence and wider banking stability.
The Investment Corporation of Bangladesh (ICB), trustee of Beximco’s Green Sukuk, is facing a dilemma over the repayment of the bond’s outstanding Tk2,800 crore balance as the five-year Islamic investment instrument approaches maturity next month.
As the exposure is spread across 22 public and private banks, including several of their subsidiaries, it has raised concerns about a potential increase in classified investments across the financial sector if the repayment crisis leads to a default.
Beximco, owned by Salman F Rahman, former private industry and investment adviser to ousted prime minister Sheikh Hasina, raised Tk3,000 crore from the capital market in 2021 through the country’s first private-sector, Shariah-compliant Green Sukuk.
Of the amount, around Tk200 crore was converted into shares of Beximco Ltd, leaving Tk2,800 crore outstanding. The remaining amount is due for repayment to Sukuk holders by 23 December.
Now, its trustee faces three complex challenges.
It is uncertain whether the full investment can be recovered by the maturity date, but it also lacks legal grounds to declare Beximco in default because periodic yield payments are still being made from the cash flows generated by its solar plant – the Teesta Solar project.
Infograph: TBS
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Infograph: TBS
Since going live in 2023, the solar project has generated around Tk2,000 crore in revenue by selling renewable electricity to the government and has paid approximately Tk1,500 crore in interest to investors.
Without a formal default declaration, ICB is legally barred from initiating recovery measures, including liquidating pledged assets, to recoup funds before the December deadline.
Amid this boiling crisis, the governing board of the special purpose vehicle (SPV), an ICB entity established to manage and oversee the Beximco Sukuk, met on 11 October to assess the situation and formulate a plan as maturity is very near.
According to meeting minutes obtained by The Business Standard, the board identified three priorities to safeguard investors’ interests: evaluating proposals from core and strategic investors; exploring asset liquidation and refinancing options; and amending the relevant documents to facilitate restructuring while addressing legal issues.
A member of the governing board, speaking on condition of anonymity, also acknowledged that the situation had become increasingly complex.
In June this year, the trustee, acting on the recommendation of a high-level Bangladesh Bank committee, applied to the capital market regulator for a six-year extension of the sukuk’s tenure to prevent a default.
However, the Bangladesh Securities and Exchange Commission (BSEC) has yet to respond to the application. The regulator asked ICB to submit a formal no-objection certificate (NOC) from the central bank committee.
“We discussed all possible solutions and decided to explore new avenues to avoid a default on the country’s flagship Islamic Sukuk,” the board member told TBS.
“Meanwhile, a foreign entity and a UAE-based advisory firm, representing interested buyers, have expressed an interest in investing in the Sukuk-funded Teesta Solar project. While we evaluated these proposals, no final decision has been made on how to proceed,” the member added.
A senior official in ICB’s trustee division said failure to extend the sukuk’s maturity would plunge the sector into a severe institutional crisis, forcing more than two dozen exposed banks and financial institutions to absorb substantial provisioning shortfalls.
Such losses would erode profits, weaken capital adequacy, and create risks for the wider banking system, the official said.
“Beyond balance sheet strain, an unextended maturity threatens legal gridlock through investor lawsuits, jeopardises power generation at the Teesta Solar project due to operational funding shortfalls, and severely damages investor confidence in Bangladesh’s capital market and trustee frameworks,” the official said.
High tariff lures foreign investors
According to the sukuk trustee, two foreign firms – the Japan-Bangladesh joint venture Revival Global Ltd, and the UAE-based investment and advisory firm Adsum Capital Management LLC – have expressed interest in investing in the Beximco Green Sukuk.
Trustee sources said the Teesta Solar project enjoys a significantly higher tariff than other solar power projects under a 20-year agreement. The plant generates monthly revenue of Tk50 crore, making it attractive to foreign investors.
Under the agreement, the Bangladesh Power Development Board (BPDB) pays $0.15 per kilowatt-hour (kWh) for electricity generated by Beximco’s Teesta Solar project, according to the information memorandum published when the sukuk was issued.
However, BPDB has received substantially lower tariff offers for solar power projects across the country, according to an earlier TBS report.
The average tariff quoted by bidders across various tenders stands at 8.27 US cents per kWh, 37.77% below the current average solar generation cost of 13.29 cents, BPDB officials confirmed.
The new average tariff is also significantly lower than the rates offered under unsolicited solar projects approved during the previous government, with tariffs falling by as much as 21% compared with those earlier deals, the report said.
Revival Global and Adsum Capital
Revival Global expressed initial interest in October in investing in the Beximco Green Sukuk Al-Istisna’a, citing Beximco’s financial distress, a funding shortfall at the Korotoa Solar Project and growing liquidity concerns among sukukholders.
In a letter seen by TBS, the company said “our proposal to invest in Beximco Green-Sukuk is timed strategically.” Revival said its proposed intervention could stabilise the trust, address immediate liquidity shortages and protect institutional and general investors ahead of the sukuk’s final redemption in December 2026.
It also said investment could provide the project-level funding needed to complete the Korotoa Solar Project and help meet electricity demand in the country’s northern region. Revival Global expressed willingness to participate in any restructuring, secured against the underlying sukuk assets and future solar project receivables.
Earlier in August, UAE-based Adsum Capital expressed interest to ICB in exploring investment and acquisition opportunities within the Beximco Group, particularly Teesta Solar Ltd.
The capital firm said it had received formal interest from a prominent UAE-based institutional investor with substantial financial capacity and international investment experience. It was authorised to engage with Bangladeshi stakeholders and explore a transaction, subject to due diligence and regulatory approvals.
Following the proposal, ICB sought guidance from the BSEC. The commission instructed ICB to facilitate engagement with Adsum, subject to approval from sukukholders and other relevant parties, while ensuring regulatory compliance and confidentiality.
ICB subsequently held an in-person meeting with Adsum, but it produced no tangible outcome.
Beximco objects to talks with Adsum
However, Beximco has objected to Adsum’s proposal to acquire Teesta Solar, a 200MW power plant in Gaibandha, warning that discussions or a non-disclosure agreement (NDA) could undermine its interests and the existing sukuk structure.
In an eight-page letter signed by Group Managing Director Osman Kaiser Chowdhury, Beximco urged ICB not to engage with Adsum or sign an NDA to facilitate its proposal.
The company cited ongoing efforts to extend the sukuk’s tenure and the work of a Bangladesh Bank-formed committee examining a possible extension and restructuring.
Beximco said such engagement would be detrimental to the interests of the originator, Teesta Solar, Korotoa Solar and the sukuk structure.
The state of Beximco
Beximco issued the country’s first asset-backed, Shariah-compliant corporate green sukuk in 2021, raising Tk3,000 crore. Banks and their subsidiaries invested Tk2,439 crore through private placements, while Tk558 crore was raised through public offerings.
Of the total proceeds, Tk2,155 crore was spent on the Teesta Solar Plant, against an original allocation of Tk1,886.83 crore. Another Tk39 crore went to the Korotoa Solar Project, against an allocation of Tk308.31 crore, while Tk806 crore was used for textile sector expansion.
Following the fall of the Awami League-led government in August 2024, the conglomerate suffered severe setbacks. Multiple assets were damaged, and nearly a dozen group-owned companies were forced to shut down at its industrial park in Gazipur.
Its founder, Salman F Rahman, is now in prison facing multiple charges, leaving the group in a severe liquidity crisis.
Moreover, the Korotoa plant, planned as a 30MW solar project, has yet to begin operations. A fire during the unrest in August 2024 damaged its transformers and site office, further delaying implementation.
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