City Group Plans Tk 1,500cr Capital Market Fundraising to Cut Bank Loan Reliance

Dhaka, August 13, 2026 — City Group, one of Bangladesh's leading commodity importers and processors, plans to raise up to Tk 1,500 crore from the capital market — marking the 53-year-old conglomerate's first entry into the equity market as it navigates a period of financial pressure linked to rapid expansion, higher interest rates, currency depreciation, and delayed returns on some investments. The fundraising signals a strategic pivot for one of the country's most influential consumer goods conglomerates.

📊 Fundraising Snapshot

City Group has appointed LankaBangla Investments PLC as the issue manager and ONE Bank PLC as the banking partner for the proposed transaction. The fundraising will proceed on a best-efforts basis over the next 12 to 18 months, subject to regulatory approval and market conditions. The structure may include:

• 💰 Initial Public Offering (IPO) — potential public equity issuance
• 🤝 Private equity — institutional investor placement
• 📄 Preference shares — hybrid equity instrument
• 💸 Corporate bonds — long-term debt instrument
• 🕋 Sukuk — Shariah-compliant investment certificate

According to the banking regulator and lending banks, City Group has outstanding debt of approximately Tk 25,000 crore across 48 banks and non-bank financial institutions — making this one of the largest single-group debt exposures in the Bangladeshi banking system.

🏢 Why City Group is Turning to the Capital Market

The move marks a fundamental shift in City Group's funding strategy. For 53 years, the group relied almost exclusively on bank loans to finance its operations and expansion. Mohammed Nasir Uddin Chowdhury, Director of LankaBangla Investments, explained the rationale:

“Its funding had so far been largely limited to bank loans, and the group has now recognised the need for equity and long-term financing,” he said. “Part of the funds raised will be used to repay existing bank loans, and part to improve liquidity as working capital.”

Nasir indicated that not all of the funds will be raised through an IPO — some may come through preference shares and some through bonds. “We want to connect them to long-term financing tools,” he added. “It’s true that if they could have come to the capital market earlier, it would have been better, and they might not have faced their recent issues.”

🧑‍💼 Expert Reaction: Smart Move, but Market Ready?

Syed Mahbubur Rahman, a former chairman of the Association of Bankers, Bangladesh (ABB), described the development as a “smart and better move” for City Group to find a new avenue for financing. “It should have come to the market much earlier. It’s a good lesson for other companies too, to come to the stock market while they remain in a good position,” he said.

However, Mahbubur expressed concern about whether the market is ready to provide large amounts of funding, noting that it has remained sluggish for many years. “The capital market should be more private-sector friendly,” he added, “so that companies do not need to wait long to raise capital.”

The tension between City Group's ambition and the market's absorptive capacity is the central strategic question hanging over the fundraising. Bangladesh's capital market has struggled with low participation, limited liquidity, and few large IPOs in recent years.

⚠️ How City Group Came Under Pressure

Bankers and industry sources, speaking on condition of anonymity because they were not authorised to discuss client matters publicly, said City Group's expansion in recent years had extended into non-core sectors — including cement, LPG, tea, media, and economic zones. Profits from its core food and commodity businesses had been channelled into these newer ventures, which failed to generate expected returns.

The biggest drag on the group's finances has been the Hoshendi Economic Zone in Munshiganj, where City invested nearly Tk 12,000 crore to establish six industrial units. Despite completing construction, the factories remain idle because they lack gas connections — a problem City Group formally raised with the Bangladesh Bank earlier.

City Group is now exploring the sale or divestment of several non-core assets:

• 🏭 Hoshendi Economic Zone — Munshiganj, Tk 12,000 crore invested
• 🌿 Tea garden — non-core agriculture asset
• ⛽ LPG business — non-core energy vertical
• 📺 Ekhon TV — media business

💵 Macroeconomic Pressures Cited by City Group

In a letter to the Bangladesh Bank governor a few months ago, City Group Managing Director Md Hasan outlined a set of macroeconomic factors affecting the group's operations and sought regulatory support. The letter quantified the macroeconomic drag in striking terms:

• 💸 $900 million decline in import financing capacity
• 📉 42 percent fall in the taka against the US dollar over the past four years
• 📈 4-5 percentage point increase in domestic lending rates
• 💵 US dollar borrowing costs nearly tripled since 2022
• 🚫 $400 million reduction in effective credit limits due to tighter LC confirmations

City Group has requested that the central bank instruct lenders not to classify its existing loans until September 30, 2026, while providing working capital support and loan restructuring — a regulatory forbearance ask that signals the group's near-term liquidity stress.

🤝 Strategic Context: A Test Case for Capital Market Deepening

The City Group fundraising is more than a single corporate event — it is a test case for the deepening of Bangladesh's capital market. If successful, it could open the door for other large family-owned conglomerates to consider equity market participation, addressing the long-standing over-reliance on bank financing that has constrained Bangladeshi corporate growth.

An agreement formalising City Group's entry into the capital market was signed at the group's corporate head office in Dhaka on August 12. The signing was attended by Md Hasan (Managing Director, City Group), and Farzana Rahman and Shampa Rahman (both sponsor shareholders and directors of the group).

For Bangladesh's broader financial sector, the outcome of City Group's capital market venture will be closely watched — both by other conglomerates considering similar moves and by policymakers eager to deepen the country's capital markets as a buffer against banking sector stress.