Mobile financial services company Nagad has filed an application with the Bangladesh Securities and Exchange Commission to raise around Tk500 crore by issuing a zero coupon bond.
The MFS entity operates as a joint venture of Bangladesh Post and Third Wave Technologies Limited (recently renamed Nagad).
Nagad recently submitted documents related to the obligation, BSEC officials said.
The entity has applied for a zero coupon bond with a face value of up to Tk 750 crore and the term of the zero coupon bond is five years and the coupon rate can reach 10 percent, said the responsible.
The nature of the bond is a transferable, redeemable and non-convertible zero coupon bond.
A zero coupon bond is a debt security that does not earn interest. Instead, it trades at a haircut, earning a profit at maturity, when the bond is redeemed for its full face value.
U.S. firm Kiu Global Limited intended to invest $ 30 million in the bond, BSEC officials said.
The BSEC at a committee meeting on July 14 decided in principle to give a letter of no objection to the letter of intent submitted by the foreign company, they said. BSEC spokesperson and executive director Rezaul Karim told New Age that Nagd recently submitted an application and documents for approval of a zero coupon bond.
The regulator will make its decision on the bond proposal after properly assessing the documents, he said.
The commission could request more documents, if necessary, to enable MFS to raise funds by issuing the bond, he said.
Only companies and other eligible investors will be allowed to buy the bond through a private placement, BSEC officials said.
They said that, according to the documents, Nagad would use the fund for loan payment, increasing working capital and expanding network and operational activities.
Riverstone Capital Limited is the arranger of the bond.
Nagad was launched on March 26, 2019.
Nagad’s general manager, Tanvir Mishuk, could not be reached by phone.
A senior Nagad official said the company recently requested a fundraiser through a zero coupon bond.