The stock market regulator has approved Nagad's zero coupon bond to raise funds of Tk 510 crore on condition of fulfilling some regulatory requirement.

The decision came in a meeting of Bangladesh Securities and Exchange Commission (BSEC) on Sunday presided over by its chairman, Prob Shibli Rubayat Ul Islam.

The regulator, however, did not mention the issue of the Nagad's capital raise approval in the press release.

Nagad was asked to submit trust deed registration, Credit Information Bureau's clearance of all directors and no objection certificate (NOC) from Bangladesh Bank, said a commissioner of the BSEC, preferring anonymity.

As Nagad was not listed company so the news of the approval was not required to include in the press release, he said.

Actually, the commission did not want to publish the news, he added, while he repeatedly requested not to be named considering the sensitivity of the issue.

Another commissioner of the BSEC told The Daily Star that Nagad's bond was approved despite getting some observation from the capital issue department.

The main observation was that Nagad has been doing business by taking NOC instead of licence, he said, adding the company is trying to get the licence following the Bangladesh Bank's order.

For instance, the government and private firm Third Wave Technologies agreed to share the ownership of Nagad by 51 per cent and 49 per cent respectively, he said

On the other hand, the company is doing good business and investors are ready to invest, which encouraged the regulator to approve the zero coupon bond, he added.

A zero-coupon bond is a debt instrument that does not pay interim coupons but instead trades at a deep discount, rendering profit at maturity, when the bond is redeemed for its full face value.

With a paid up capital of Tk 3.5 crore, Nagad wants to raise the capital to pay off existing debts, support capital expenditure and meet working capital requirements to expand its business in the MFS sector, which has been growing fast since it was launched in Bangladesh in 2011.

Nagad has Tk 416 crore in debt, of which the company plans to pay off Tk 350 crore through the bond issuance, according to its filing at the Bangladesh Securities and Exchange Commission (BSEC).

It wants to use Tk 100 crore of the money raised through the bond to manage its day-to-day operations, Nagad said in the application.

Kiu Global, a US-based digital services company, has already expressed interest to subscribe to $30 million (Tk 254.45 crore) of the bond, Nagad said in a press release last month.