Written by The Banking Post
Renata’s move to issue listed preference shares may open a new avenue for companies seeking to cut debt costs while restoring investor confidence in Bangladesh’s capital market.
The pharmaceutical company has raised Tk 3.25 billion through privately placed preference shares, which began trading on the Alternative Trading Board (ATB) of the Dhaka Stock Exchange (DSE) on Monday. The shares offer a fixed 15 per cent annual return and are designed to replace high-cost short-term bank borrowing with longer-term funding.
“The listing has created an opportunity to trade a new product on the stock exchange,” said Mohammad Asadur Rahman, acting managing director of the DSE, at the debut ceremony. He added that Renata’s approach could encourage other firms to tap similar instruments.
Preference shares are considered hybrid instruments, blending features of equity and debt. Renata’s shares carry a face value of Tk 1,900 each and do not provide voting rights. They will pay fixed dividends and can be converted into ordinary shares at a price of Tk 475 per share in four phases, starting three years after issuance, with 25 per cent convertible in each phase.
Syed S. Kaiser Kabir, managing director of Renata, said the company expects its financial position to improve visibly within the next one to two years as debt pressure eases. He noted that preference shares were chosen to avoid diluting majority ownership, which would have occurred through a rights issue.
Renata’s profits had fallen sharply in recent years, from over Tk 5 billion five years ago to Tk 2.20 billion in FY25, largely due to rising finance costs and an inability to raise product prices. The situation worsened after a sharp devaluation of the taka inflated a planned Tk 10 billion expansion investment to nearly Tk 15 billion, forcing the company to rely on debt after years of maintaining a largely debt-free balance sheet.
“To address this, we opted for an alternative financing structure,” Mr Kabir said, adding that the dividend rate was benchmarked against Treasury bond yields. Although bond rates declined during the nine-month issuance process, the preference shares still offer an attractive 15 per cent return for investors.
DSE Chairman Mominul Islam said many otherwise strong companies have seen their financial health weaken due to post-pandemic shocks, currency depreciation and higher interest rates. Reducing overreliance on bank loans and using capital market instruments such as preference shares and bonds is crucial, he said.
Market officials believe Renata’s move could help deepen the secondary market and attract new participants, while providing companies with flexible tools to strengthen balance sheets. The DSE said it is working with regulators to promote listings on the ATB and expand capital market–based financing options.
