CDC Group, the development lender of the UK, will lend $15 million to RFL Electronics Ltd to help the Bangladeshi company expand its manufacturing capacity and make electronics at reasonable prices.
The loan will be used to acquire equipment for RFL Electronics' state-of-the-art manufacturing facility in Narsingdi which produces consumer electronic goods for the local market.
The agreement was signed between RFL Electronics and the CDC on Wednesday at a hotel in Dhaka, said Pran-RFL Group in a statement. Uzma Chowdhury, corporate finance director of Pran-RFL Group, and Richard Palmer, head of corporate debt of the CDC, signed the deal on behalf of their respective organisations.
The CDC is investing alongside Standard Chartered Bangladesh. The British bank is providing an additional $3 million.
RFL Electronics produces television sets, refrigerators, air conditioners, rice cookers, blenders, microwave ovens, electric kettles, infrared cookers, room heaters and fans which are sold under the Vision brand.
The investment will support the creation of 1,500 manufacturing jobs, said the statement. The total job creation is expected to reach 2,500 over the course of the CDC's seven-year lending period.
In the statement, Uzma Chowdhury said, “Consumer electronics goes a long way in improving livelihood if it can be offered at affordable price. In order to make it affordable, the industry needs to be established within Bangladesh. We are delighted to have the CDC as our partner.”
In another statement of the CDC, Chowdhury said the CDC's long-term debt at affordable cost allows the company to manufacture electronics at a reasonable price and with high safety standards within Bangladesh.
Palmer said, “As Bangladesh's economy grows we see our investment in RFL Electronics as an opportunity to create jobs, meet the growing demand for consumer goods and help the country boost its local manufacturing.”
He said access to long-term debt capital in local and foreign currency remains limited in Bangladesh.
“So, our investment plays an important role in helping the company grow by importing the equipment that will modernise RFL's manufacturing base in Bangladesh,” he said.
Ahsan Khan Chowdhury, chairman and chief executive officer of Pran-RFL Group, RN Paul, managing director of RFL Group, Srini Nagarajan, head of South Asia of the CDC, and Nicolas Pitiot, investment director, were present, among others, on the occasion.
This is the CDC's first direct corporate debt investment in Bangladesh and follows other recent financings for projects in the country, including a $103 million investment in the Sirajganj-4 power plant and $25 million funding for Grameenphone, Bangladesh's leading telecoms company, said the UK development institution in the statement.
Wholly owned by the UK government, the CDC's mission was to support the building of businesses throughout Africa and South Asia to create jobs and make a lasting difference to people's lives in some of the world's poorest places. Its portfolio of investments was valued at £4.8 billion in 2016 and includes 1,245 investee businesses, according to its website.
RFL Electronics is part of the Pran-RFL Group of companies which is a diversified conglomerate specialising in consumer goods such as food products, beverages, plastic goods and furniture.