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ACI Motors lands Tk 126cr in foreign investment
ACI Motors is set to secure an equity-based foreign investment of Tk 126 crore from two companies as it landed its first foreign investment.
The fund from the Netherlands and Singapore would be used to accelerate business growth and expand existing manufacturing facilities of ACI Motors.
"ACI Motors has huge growth potential. So, we want to go for further investment where equity investment is better than debt," said Pradip Kar Chowdhury, executive director for finance and planning at ACI, which owns the company.
The fund will be raised through the issuance of 23.33 lakh convertible non-cumulative preference shares of Tk 100 each at a premium of Tk 440.
In the case of non-cumulative preference shares, the dividend is only payable from the net profits each year. If the company makes no net profits in a year, the arrears of dividend can't be claimed in the subsequent years.
The shares will be issued to Bangladesh-managed account CV, a limited partnership of the FMO and SDI Pte, the two investors.
The FMO is a Dutch development bank structured as a bilateral private-sector international financial institution based in Hague.
SDI Pte is an investment company based in Singapore.
The arrangement will reduce ACI's shareholding in ACI Motors to 52.7 per cent from 65 per cent.
"The investment will allow ACI Motors to go further," Chowdhury added.
ACI Motors sells products such as agricultural machinery, construction equipment and motorcycle.
It offers a complete line up of high horsepower agricultural machinery, bringing in tractors, power tiller, reaper, mini combine harvester and rice transplanter.
It introduced the Sonalika tractor, which is specially designed for Bangladesh making it suitable for small land size and roads.
ACI Motors became the distributor of Yamaha Motorcycles in 2016.
The company represents some of the world's leading construction equipment manufacturers, providing backhoe loader, soil compactor and tandem roller, among others.
In 2017, ACI Motors added China's leading brand Lovol's construction equipment to the wheel loader and mini excavator segment.
It brought Japanese brand Kobelco in the segment of the premium brand excavator. In 2019, it added pick and carry crane from India's Indo Farm Equipment.
"The new shareholders' expertise, especially that of the FMO will help us to a great extent," said Chowdhury, also the chief financial officer of ACI.
The foreign investors will sit on the board of the company and will thus play a role in improving the corporate governance further, he added.
ACI Motors' revenue stood at Tk 954 crore in the three quarters of the 2019-20 financial year. The full year report is yet to be published.
Assets were valued at Tk 1,407 crore and liabilities Tk 1,115 crore as on 31 March.
ACI Motors logged a profit of Tk 98.6 crore from 19 July 2019 to 20 March this year.
However, ACI incurred a loss of Tk 119.5 crore during the same period owing to higher operating costs and finance cost.
In the last three quarters, ACI's total finance cost was Tk 352.6 crore and the operating cost totalled Tk 1,264.2 crore.
As of 31 March, the group's long-term bank loan stood at Tk 826 crore and the short-term loan Tk 2,978 crore.
The stocks of ACI, listed on the Dhaka Stock Exchange since 1976, rose 2 per cent to Tk 273 on Thursday.
