Dhaka, Mar 10: The United Commercial Bank (UCB), a leading private commercial bank in Bangladesh, has firmed up plans to float a Tk. 10-billion infrastructure fund. The bank will send the proposal to the regulator, Securities and Exchange Commission (SEC), for approval within a month, said an official.

UCBL Infrastructure Fund, where UCB will invest Tk. 1 billion as sponsor, will be the third in the race after Prime Bank and IFIC bank’s infrastructure funds.

Fifty per cent of the fund will be invested in the secondary market and the rest will find its way into power projects, initial public offerings and bonds, the official said.

Alif Asset Management Company is the fund manager. Such funds are managed by specialist fund managers who make the investment decisions on behalf of the fund. They can diversify into infrastructure assets and ensure an income stream from essential services.

Meanwhile, proposals for a Tk. 10-billion IFIC Infrastructure Fund and a Tk. 5-billion Prime Bank Infrastructure Fund are still awaiting the SEC approval.

“Infrastructure fund has already emerged as an effective stock market tool for financing large projects in the emerging markets worldwide, including India.

So, in case of Bangladesh, this is obviously a welcome move,” said Salahuddin Ahmed Khan, professor of finance at Dhaka University. The government, too, floated the Bangladesh Infrastructure Finance Fund (BIFF) in 2010. The BIFF is in the process of issuing bonds and debt instruments to local and foreign investors in a bid to raise funds for financing projects, including those of power and infrastructure.

There are 33 closed-end mutual funds in the country making up only 3.51 per cent of the total market capitalization.

Source: The Independent-Bangladesh/March 11, 2011