Equity and Entrepreneurship Fund (EEF)

8/16/2019 Equity and Entrepreneurship Fund (EEF)

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The Bangladesh Financial MarketsCourse Code : D101

Prepared for :

Faysal h!ad "han

Lecturer

Prepar

Md. Mahfuzul Haque

Md. %edoanul Haque &!"#$

Md. (hariqul )nam !

Md. +azmul ,slam !"#$-atch *

Post raduate &iploma in Capital Mar/et

Bangladesh #nstitute o$ Capital

Market



,ntroduction

• 0ormed in !!!$!"

• -&1 " -illion 2"!! Crore3

• 4quity not Credit5 Loan or )d6ance

• 4quity holding

• 17o sectors : 440 )gro and 440 ,1

%1& '&

4quity &e6elopment

0und

4quity and 4ntrepr

0und-angladesh

-an/,n6estment Corporat

-angladesh



ision

Creating ne7 entrepreneurs in promising but some7hat rbased5 food processing and ,C1 sectors and enin6estments in such sectors by unemployed young5 educenergetic indi6iduals.

Contributing to employment generation and socioimpro6ement and &P gro7th of the country is the 8is

440 (cheme.

4nsuring a 9double bottom line returns that see/s social addition to ;nancial returns and &P gro7th through ensuccessful in6estments in thrust 2Core3 sectors5 o6ernment<s main goal.



Mission

• 0ostering decentralization of the economy

• Capital 0ormation through extending ;nancial support in promising buris/y ne7 projects

• 1o create opportunities for the promising young5 educated5 s/illed andpeople to participate in the 6alue$added chain through commencing corpobusiness and thereby play an important role in increasing the o6ernmen

• )ssisting ;sheries and dairy$based and processing projects of such prodthe nutrition needs

• 1o de6elop ,nfrastructures in rural and under$pri6ileged areas ? ensure oof fallo7 land>

• 1o meet the domestic demand as 7ell as increase the net export 6alue

• 1o promote 7oman entrepreneurs

• 1o di6erse ser6ices to stay rele6ant in tomorro7<s -angladesh.



*urpose o$ the +tudy

1he broad objecti6e is• 1o carry out a re6ie7 of the operations of 440 to assess the

facilitated in agro based and ,C1 industries under 440 (cheme

• (uccess in launching production and continuing 7ith productio

• Contribution of 440 (cheme including production performancemployment generation

• 0actors a@ecting performance of 440 supported projects

• Major Challenges in existing scheme and some thoughts reprospecti6e Corporate (tructure

• Management Process and 0unding model based on realities.



Methodology o$ +tudy

• -asically descripti6e and Auantitati6e in nature.

• (ome rele6ant data and a6ailable information has been collected regarding;nancing model and exit strategy through ,C-.

• 1he participants of this group 6isited ,C- and consulted 7ith their executface$to$face discussion and shared some experience5 ideas5 beliefs and 6alu

• Primary data and information from the 6arious des/s of the 440 unit-angladesh

•

(econdary information 7as ta/en from the Bcial 7ebsites of -anglade,C-.

• Auantitati6e data 7ere collected ? consolidated from the audited ;nanciaon 440 operations since the (cheme<s inception in !!!$!!" till )pril !"#data trend5 ta/e a loo/ at the cause and e@ects and establish relations a

1he report re6eals data relating to (anction5 &isbursement5 -u,mplementation (tatus of 440 projects5 since inception of the (cheme.



,i!itations o$ The +tudy

•

1he report has been furnished mainly on the gained through internet based learning about capital ;nancing for 7hich further guidancgo6ernmentDpolicy ma/ers is most essential>

• 1he major recommendations concluded in thi

are based on some assumptions for 7hich from the highest authority of the o6ernmencourse5 the prime concern for us.

• 1ime 7as really critical factor for us to accompreport.



Background

•

1o encourage the in6estment in potential )gand ,C15 o6ernment of -angladesh set up a&e6elopment 0und 24&03 through budget alloc!!!$!".

• ,n " Eune !!' administration of 440 hatransferred to ,C- through a sub agency agreema term of ten years.



Maor +takeholders

123B participates as an equity partner of the pri6ate entrepreneurs

4 Bangladesh Bank acts as an agent of the gob to frame policiethe fund of 4405 monitor performance of ,C- ? reports to the gofund utilization.

5 #CB does the operational management of the fund including:

(hort listing of 4B, applications

8eri;cation of project pro;le

)ppro6al of sanction and disbursement

Conduct share buy$bac/ related acti6ities as a sub$agent of --.

' ,ien6participating 7anks e6aluate projects follo7ing a physicalof the project site5 enters into an in6estment agreemententrepreneurs and disburses the installment cheques fa6oring entr



pplication and sanctionprocess•

(ubmission of 4B, of the project to -angladesh -• %egistration in the %egistrar Bf Eoint (toc/ Co

)nd 0irms2%E(C3

• (hort listing of the entrepreneurs through inter6

•

(ubmission of appraisal report• )ppro6al of the project appraisal committee 2P)C

• (anction letter is issued 7ith the appro6al of -oard for 440. Currently P)C and (anction -oard for 440 both comprises of ' mem--5 ,C- MB0 ? )gricultural 4xpert.



Cu!ulati-e position o$ EEF sanctions=dis7urse!ent and reco-ery up to 50 pril 40

*articul

ars

+anction Dis7urse!ent >eco-

+o. ofproject

)mount +o. ofproject

)mount +o. ofproject

gro "JK 5"*'.** J' "5"##.J "*

#CT ""# "J*.' K! 'J.KG #

Total "K** 5*.J K!' "5#*." "#'

0&

5'&

&

+anc

Dis7u

>eco

2raphical representation o$ sand reco-ered a!ount o$ #CT2raphical representation o$ sanctioned= dis7ursedand reco-ered a!ount o$ gro *roects



+ocial spect+tudy >eports+?3T nalysis



+ocial spect

•

440 (cheme contributes to 9double bottom line • to generating a mar/et rate of return on in6ested capi

• it also loo/s for social5 en6ironmental and economic the communities

• Ensuring 3pti!u! @tiliAation o$ ,and

• E!ploy!ent 2eneration• )round "#!! projects ha6e gi6en appro6ed

• )round J!! projects ha6e been implemented

• 4mployment opportunity has been created for #5#G"



+ocial spect

• >educed po-erty and increased the ta/ 7aseco!!unities• 1he (uccessfully implemented companies ha6e been running pr

creating 7ealth for respecti6e entrepreneurs5 employees5 suppliersand other sta/eholders

• *riority in ?o!en e!po.er!ent= $reedo! ghters resident Bangladeshis

• #n$rastructural De-elop!ents• nder the 440 agro sector ;nancial assistance in the form of equity

hatchery and ;sh culture5 mil/ production5 biogas production5 poultfeed mill5 mixed fertilizer5 meat processing5 auto rice mill5 specstorage5 tissue culture5 crocodile and turtle culture5 etc. projects.



+ocial spect

•

Digital Bangladesh• 440 ,C1 sector is gi6en utmost priority so that it

signi;cant role in soft7are de6elopment and commsector

• #ncreasing the source o$ protein and !iner



+tudy >eports

•

+tudy >eports on the acti-ities o$ EEF• ) total of !* studies 7ere carried out so far on the ac

440 since inception

• ,mplementation Monitoring and 46aluation &i6ision the Ministry of Planning carried out an e6aluatioprojects funded under the 440 in !!#

• ) further re6ie7 of the acti6ities of 440 7as carriedteam of -angladesh -an/ ocials in !!'



+tudy >eports

•

Maor Findings in those +tudy >eports• Bne of the main objecti6es of 440 is to facilitate in6e

di6erse agro based and ,C1 industries

• objecti6e has been largely met

• 1he studies identi;ed problems relating to deladisbursement5 shortage of 7or/ing capital amonitoring as the main reasons behind implementati

• Less than satisfactory outcome in ,C1



+?3T ,9+#+

•

+trengths: (*otentially *ositi-e #nternal Fa• ,C- has ' years of extensi6e experience and rep

de6eloping entrepreneurial leadership

• ,C- has a strong ,1 di6ision 7ith s/illed ,1 professioare capable of pro6iding ,1 solutions and ser6ices

• Combination of technical /no7ho75 expertise and ein Project )ppraisal Committee 2P)C3 and (anction -o

• Huge clientele base has been sho7ing their inestablishing inno6ati6e 8entures throughout the coun



+?3T ,9+#+

•

?eaknesses: (*otentially egati-e #Factors)• 1echnologies in ne7 types of projects are not 7ell /no

• Competitors can o@er similar products quic/ly at lo7

• Bnly lo7 capital pri6ate 6entures 7ill be co6ered for ;

•

Nill ta/e part o7nership in the proposed 6enturelimitedDno participation in managing the 6enture.

• High 1ransportation costs.

• Bpportunity costs.



+?3T ,9+#+

•

3pportunities: (*otentially *ositi-e EFactors)• Bptimum mobilization of resources li/e land5 labo

technology and organization 7ill reduce ,mport cost sa6e a huge amount of foreign currency.

• 1he unemployment problems 7ill be sol6ed to a grea

• 1he proposed business falls in the priority sector de6

• 1he 4ntrepreneurs 7ill get an opportunity to learn corporate form of -usinesses.



+?3T ,9+#+

• Threats: (potentially negati-e e/ternal $actors)• Possibilities of discontinuation of o6t. funding.

• ,ncrease of 4B, )pplications.

• 4nforcement has been challenging due to Lac/ of structured leframe7or/.

• 4ntrepreneurs= Pro;t hiding tendency to a6oid taxes and pro;t7ith the minorities.

• Lac/ of practice in corporate culture and demonstrated negligemaintain proper records in accordance 7ith ))P.

• %apid changes in business en6ironment and frequent changesand regulations can impact the business.

• (er6er crashing and hac/ing possibilities.

Equity and Entrepreneurship Fund (EEF)

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