ACI stocks soared yesterday when news broke that its subsidiary ACI Motors is set to receive Tk 83.99 crore in foreign investment for the expansion of its vehicle manufacturing capacity.

Stocks of ACI closed 2.51 per cent higher at Tk 269 at the Dhaka Stock Exchange (DSE).

The plants in question are of Yamaha motorcycle and agro machinery. The company is also planning to set up a plant to assemble Foton-branded commercial vehicles.

With the investment, the motorcycle plant's annual production capacity will reach 1,40,000 units from 1,08,000.

The investment is being made by Dutch investment bank FMO, United Kingdom's development finance institution Commonwealth Development Corporation (CDC) and Norfund through Bangladesh Managed Account CV, which is a limited partnership.

"We decided to take the equity investments not for money, but for innovation and utilisation of their experiences," said Pradip Kar Chowdhury, chief financial officer of ACI.

"We wanted to get investment from those who can contribute to our business expansion, technological innovation, and idea generation," he said.

"The CDC can add value to our company as it has experience in innovation, artificial intelligence etc," he said.

"All the companies have worldwide exposure, and they will sit in our board so we hope that they will contribute to improve our company," Chowdhury added.

The ACI will issue 15.55 lakh convertible, non-cumulative preference shares worth Tk 100 each at a premium of Tk 440 per share.

In case of non-cumulative preferred stocks, the dividend is only payable from the net profits of each year. If the company makes no net profit in a year, the arrears of dividend can not be claimed in subsequent years.

"The proceeds of the investment will be used for business growth as well as for expansion of existing manufacturing facilities of ACI Motors," the company said in a disclosure published on the DSE website yesterday.

The new investment will reduce ACI's shareholding in ACI Motors from 52.70 per cent to 46.80 per cent, the company added.

ACI Motors is one of the market leaders in the distribution of agricultural machinery in Bangladesh and the sole distributor of Yamaha motorcycles in the country.

The FMO will support access to mechanisation for farmers and help ACI Motors increase local value creation in the motorcycle segment, the FMO said about the investment in its website.

Bangladesh is experiencing significant labour shortages during peak crop harvesting seasons and mechanisation can play a key role in increasing yields and improving farmers' income.

The FMO's investment is expected to contribute to economic growth and reduce inequalities and indirectly to zero hunger, it added.

Earlier, in 2020, the FMO bought 23.33 lakh convertible non-cumulative preference shares worth Tk 126 crore.

Of the total foreign fund, including the previous investment, around 65 per cent will be used as capital expenditures while the remaining as working capital.

Revenue of ACI Motors rose 1.67 per cent year-on-year to Tk 970 crore in the nine-month period of the current fiscal year, from July 2020 to March 2021. During the same period, its profit before tax was Tk 91.74 crore.

Its asset was Tk 1,381 crore and liabilities Tk 849 crore as of March 31, 2021, according to the financial reports.

ACI Motors offers a line-up of high horsepower agricultural machinery, such as tractors, power tillers, reapers, mini combine harvesters and rice transplanters.

It introduced the Sonalika Tractor, which is said to be specially designed for Bangladesh's small sized lands and roads.

In 2017, ACI Motors added China's leading brand Lovol's construction equipment such as wheel loaders and mini excavators.