Trading of preference shares issued by Renata PLC has begun on the Dhaka Stock Exchange’s Alternative Trading Board (ATB), marking the first time such securities have been listed and traded on the platform.
The trading started at 12 pm on Monday after the listing agreement signed for the instrument offering 15 per cent annual returns.
“This is the first time preference shares have been listed as tradable securities on the DSE ATB,” said DSE Acting Managing Director Md Asadur Rahman at the signing ceremony.
The listing introduces a new class of security to the exchange, broadening investment choices beyond ordinary shares and debt instruments, while the creation of a secondary market allows preference share investors to exit at will with relative ease, he added.
Unlike before, investors are not required to hold the instrument until maturity and can instead sell their holdings at prevailing market prices.
The ATB operates as an alternative platform to the DSE’s main board and is designed for securities that may not fit traditional listing requirements.
Preference shares fall into this category as they combine features of both equity and debt, offering fixed returns similar to debt instruments while providing a company with a form of quasi-equity capital.
Why Renata chose preference shares
Renata’s decision to issue preference shares was shaped by recent macroeconomic pressures. The sudden and sharp depreciation of the taka significantly increased the company’s planned investment costs.
“For the same project, the investment requirement rose unexpectedly from Tk1,000 crore to Tk1,500 crore, forcing the company to rely on borrowing within a short period, despite having remained virtually debt-free for many years,” its Managing Director and CEO Syed S Kaiser Kabir said at the event.
“Had we opted for a rights issue, the ownership of majority shareholders would have been significantly diluted, which is why issuing preference shares was considered the most suitable solution,” he added.
Because preference shareholders do not have voting rights, Kaiser Kabir said, new investors can provide capital without affecting the company’s control structure.
He said the dividend rate on the preference shares was set using treasury bond yields as a reference.
Although treasury bond yields later fell to below 11 per cent, the effective return on Renata’s preference shares currently stands at “15 per cent,” making them attractive to investors.
Preference shares also function as a risk-sharing mechanism, he said, as preference shareholders receive a fixed return ahead of ordinary shareholders when profits are available, while there is no obligation to pay dividends if no profit earned, subject to pre-agreed conditions.
Kaiser Kabir expressed optimism that the company’s financial position would improve visibly within the next one to two years, laying the groundwork for a return to lower debt levels and stronger net margins.
Alternative instruments to ease financing pressure
The issuance also highlights the growing role of alternative instruments in easing corporate financing pressure.
DSE Chairman Mominul Islam said post-Covid shocks, geopolitical instability, macroeconomic pressures, currency depreciation and rising interest rates have increased debt burdens even for well-managed companies.
Reducing bank dependency and using the capital market more actively have therefore become essential, he added, noting that preference shares and long-term debt instruments could provide repeatable financing options for large corporates and encourage others to gradually restore financial stability.
After receiving regulatory approval from the Bangladesh Securities and Exchange Commission in July, Renata raised Tk325 crore through a private placement of preference shares in October.
The preference shares are non-cumulative, non-participative and fully convertible into ordinary shares.
Each preference share has been priced at Tk1,900, with a tenure of six years from the subscription closing date of 19 October 2025, ending in 2031.
From the end of the third year, one-fourth of the total preference shares will be converted into ordinary shares each year in four phases at a predetermined conversion price of Tk475.
For the portion not converted into ordinary shares, preference shareholders will receive a fixed annual dividend of 15 per cent, subject to the availability of sufficient post-tax net profit.
With Renata’s preference shares included, the DSE ATB platform currently lists two equity securities and seven bonds.
