Mode of Finance
Grameen Fund renders financial assistance mainly in the following forms:
a. Equity Financing
GF is one of the pioneers in equity financing operations in Bangladesh. With a view to participating in the economic uplift of the country GF invests in venture projects that involves high risks or have a state-of-the- art technology. Grameen CyberNet Ltd. is one of the successful outcomes of this service.
b. Loan Financing
One of the major activities of GF till date is to advance small loans to micro-entrepreneurs, GF is using the large network of Grameen Bank to operate this business. GF also provides short-term and long-term finances to its family members and equity financed companies.
c. Bridge Finance/Mezzanine Finance
With an objective to support its family members as well as the equity-financed companies to meet their immediate fund requirements GF arranges bridge loans.
d. Management Buy Out/In (MBO/MBI)
GF also goes for take over of the management of a sick organization that has a good market potential. In this case GF buys majority shares of the company and lead to form a new management body.
e. Corporate Guarantee
GF also provides corporate guarantee service to its equity projects as well as the Grameen family members against loan.
Investment Policy/Priority
Grameen Fund wishes to maintain a flexible and pragmatic approach in extending financial assistance However, it accords priority to a small-scale industry if it has the following features:
- uses innovative and untested technology.
- produces high returns, but having high risks in non-traditional sectors.
- applies local invention/product and process.
- uses indigenous and innovative raw materials.
- export orientation and international competitiveness.
- has a potential for rapid growth.
- enhances skills.
Equity Financed Projects
Grameen Fund has participated in equity financing of the following successful projects:
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Grameen CyberNet Limited:
Formed with 51% equity financed by Grameen Fund. It has also taken loans from Grameen Fund to procure equipment. It is one of the pioneer Internet service providers of the country. The company was successfully launched and has paid off the loan from Grameen Fund within a short period.
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Grameen Bitek Limited:
A manufacturing company producing various types of electronic products such as voltage stabilizers, electro-medical equipment based on technology developed by local entrepreneurs. Grameen Fund formed the company in 1997 with 51% equity and also provided loans to expand and modernize the company. Its “Volt Guard” stabilizers and UPS/IPS products are well accepted in the market.
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Grameen Knitwear Limited:
Established in 1997, this is a 100% export-oriented composite knitwear project with knitting, dyeing, finishing, and garment production facilities. Germany is the main market for its products.
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Gonoshasthaya Grameen Textile Mills Limited:
A joint venture of Grameen Uddog and Gonoshasthaya Kendra. It is a composite textile mill with dyeing, finishing, and printing facilities for woven fabrics. The equity part of Grameen Uddog is financed by Grameen Fund as a long-term loan, with an option to convert part of the loan into equity in future.
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Grameen Capital Management Limited:
Grameen Fund entered the merchant banking arena through GCML. It performs all merchant banking activities including issue management, underwriting, portfolio management, and corporate advisory services. Its main focus is to connect the rural poor with the capital market.
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Tulip Dairy and Food Products Limited:
A public limited company approximately 12 years old. GF, in collaboration with Gonoshasthaya Kendra, took over this dairy through a management buy-out by acquiring 51% of the shares.
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Grameen Software Limited:
A joint venture in collaboration with a private entrepreneur. The company aims to develop software for both local and foreign markets.
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Grameen IT Park Ltd.:
A joint venture with GSL and Grameen Kalyan, located in the Grameen Bank Tower. GITP provides infrastructure support for IT businesses including optic fiber cabling, data transmission, VSAT, and networking facilities. The total investment is around BDT 54 million.
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Grameen Star Education Ltd.:
Originally the IT training wing of Grameen Software Ltd., now a separate company to improve quality and management. It aims to develop ICT human resources and operates 26 franchises nationwide.
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Rafiq Autovan Mfg. Ind. Ltd.:
A tri-wheeler manufacturing project founded by Mr. Rafiqul Islam, a rural auto mechanic. Using an indigenous design, the project has produced a four-stroke engine vehicle that is road-safe and environmentally friendly. All parts except the engine are made in Bangladesh.
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GlobeKids Digital Ltd.:
A joint venture with New York-based Globe Kids Inc., serving as an animation production facility in Bangladesh. The animation products are marketed by the US partner, and the studio is located in Grameen IT Park.
Polli Dushtha Bio Center Limited:
This company was created to provide loans to rural women for purchasing cows. It ensured fair milk pricing and marketing in urban areas. The company was sold to a local NGO in 2002.
Micro-Enterprise Loan Program:
One of Grameen Fund’s core activities is financing small-scale projects and micro-enterprises. Launched in late 1997, it has financed over 1300 projects with cumulative disbursements reaching Tk. 125.50 million by May 2005. As of March 31, 2005, Tk. 42.14 million remained outstanding. Funded sectors include agriculture, engineering, auto mechanics, poultry, dairy, fisheries, and handicrafts.
Concluding Remarks:
Most equity-financed projects by Grameen Fund are new ventures. While portfolio performance is still maturing, the Fund’s strategy of entering high-risk, untapped sectors is yielding promising outcomes. With strong determination, GF continues to play a pioneering role in creating a risk-sharing investment environment. It remains committed to poverty alleviation by supporting technology-driven ventures and those traditionally excluded from formal financing channels.