Direct financing in startup business rather than through fund managers in alternative investments may pose risks for the banking sector, said chairman of the stock regulator.
Speaking at a webinar as special guest on Thursday, Bangladesh Securities and Exchange Commission (BSEC) chairman Shibli Rubayat-Ul-Islam recommended assessing possibilities of a specialized bond for venture capital to raise foreign funds for the startups.Planning Minister MA Mannan joined the webinar titled, “Venture Capital and Startups for a Post-Covid Resilient Economy” as chief guest.
Venture Capital and Private Equity Association of Bangladesh (VCPEAB) organized the event to review the state of alternative investment ahead of the national budget.
VCPEAB President Shameem Ahsan presided over the session. Planning Minister MA Mannan said the government has been working together with the private stakeholders to improve the environment for investment.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower. BSEC chairman said, “There are many investors abroad are waiting to invest in Bangladesh. Many from the USA and Singapore have told me that they want to invest in potential sector.” He made the remarks, a day after a private lender United Commercial Bank Limited (UCB) announced that it will invest an aggregate amount of funds worth Tk 7 billion in a venture capital fund and a private equity fund.
Shibli Rubayat-Ul-Islam said, “The fund managers should identify the way to introduce a bond as they can facilitate many companies from a single point.”
The banking sector has begun to think on the alternative investment after Bangladesh Bank announced a Tk 5 billion fund for startups and asked the commercials bank to form a venture capital fund with 1 percent of net profit.Deputy Governor Abu Farah Md Nasser said, “The central bank is always ready to discuss with the private stakeholders to formulate prudent policy for development of the economy.”
“There are two issues. The central bank allocated Tk 5 billion for the startups’ funding while the commercial banks have been asked to formulate separate funds from their net revenue,” he said.
Agrani Bank chairman Dr Zaid Bakht said, “There are many risk factors for investing in startups from commercial banks as the new type of business takes time to grow.”
VCPEAB president Shameem Ahsan said majority of the organizations in the world will initiate impact-driven businesses and world population will consume products and services from the impact-driven companies in next 15 years
BSEC commissioner Shaikh Shamsuddin Ahmed, VCPEAB general secretary Shawkat Hossain, Shanta Asset Management vice chairman Arif Khan, Shohoz App managing director Maliha Quadir and president of Capital Market Journalists’ Forum (CMJF) Hasan Imam Rubel, among others, also joined the discussion.