Dhaka,  Tuesday
23 April 2024

SAGA OVER NAGAD TAKEOVER

Summit enters scene as Post Office loses grip

Saifullah Aman

Published: 03:18, 24 January 2024

Summit enters scene as Post Office loses grip

Photo : Messenger

In a latest turn of events, country’s leading conglomerate Summit Group is reportedly set to acquire the majority stake in Nagad, which is popularly known as a mobile financial service provider although approved by the central bank as a non-banking financial institution (NBFI).

Several reliable sources have confirmed to The Daily Messenger that the Summit Group is taking over majority ownership of Nagad, which has already introduced a new logo by removing the runner symbol from its logo that was originally associated with the postal department.

Nagad entered the country's market as a mobile phone-based digital financial service of the Bangladesh Post Office, under the Ministry of Post and Telecommunication.
Apparently backed by the government, Nagad entered the market in 2018 through a 51-49 percent ownership arrangement with the Bangladesh Post Office.

Nagad commenced operations on November 11, 2018. Initially, the company provided financial services without obtaining a license. Later, despite repeated extensions, Nagad failed to secure a license as a Mobile Financial Service (MFS). In 2023, the company acquired a license as a Non-Banking Financial Institution (NBFI) from Bangladesh Bank (BB).

While no official comments were received from the respective institutions regarding the change in Nagad's ownership, a high-ranking official from the Bangladesh Post Office told The Daily Messenger, “This has been in progress for several months. Nagad was queried by the postal department about the change of ownership. Although nothing official was announced by Nagad, our observations of their various activities and documentations indicate that a change is underway.”

When asked about the change in Nagad’s ownership, State Minister for Post, Telecommunication and ICT Zunaid Ahmed Palak said that he was unaware of any such development.
Hence, no further comment was received in this regard from his end.

A top official from Bangladesh Bank, speaking on the condition of anonymity, told The Daily Messenger, “Nagad is permitted to conduct business activities only upon the proposal of the Bangladesh Post Office. The central bank has granted numerous concessions in issuing Nagad licenses. Nagad initially operated without a license, later obtaining an interim license, and eventually transitioning to a Non-Bank Financial Institution (NBFI) license.”

It is known that after transitioning from MFS, Nagad obtained a license to operate as an NBFI. Nagad's Managing Director, Tanvir Ahmed Mishuk, is one of the directors of the newly approved company. He serves as the local representative and director of Osiris Capital Partners LLP in Nagad Finance, as indicated by documents submitted to Bangladesh Bank.
According to Bangladesh Bank, Nagad Finance's Entrepreneurial Director, Muhammad Farid Khan, representing US investment firm Blue Haven Ventures LLC, will serve as the chairman. Farid Khan is also a former director of Summit Group.

It was learned from the concerned department of Bangladesh Bank that, while the government is progressing with procedural activities to manage Nagad as a subsidiary company of the Bangladesh Post Office, long-term issues, including approval by the Prime Minister and amendments to the law, are involved in this case.

Apart from this, public holidays due to the coronavirus pandemic have resulted in additional time being taken by Nagad to complete the process of setting up the subsidiary company. Although a Memorandum of Association (MOA), Articles of Association (AOA), and Vendor Agreement have been drafted, final approval from the government is pending, causing a delay in obtaining the license.

In the end, Bangladesh Bank proposed a tough decision regarding Nagad, citing non-compliance with all conditions for obtaining the license. However, after considering various aspects, Nagad was reclassified from mobile financial services and licensed as an NBFI in the middle of last year.

A related official from Bangladesh Bank said that the MFS guidelines stipulate a link with a bank, but Nagad, being a service of the Bangladesh Post Office, posed challenges in issuing a license. To grant the license, the central bank's policy would need to be revised.

From the Nagad Finance documents submitted to Bangladesh Bank, the company's entrepreneurial directors include Blue Haven Ventures LLC from the US, Osiris Capital Partners LLC, Zen Fintech LLC, and Inclusion Ventures Pvt Ltd of Singapore. Other entrepreneurial directors are Maruful Islam Jhalak of Dhaka, Farhan Karim Khan (son of chairman Muhammad Farid Khan), Rashedul Haque, and Muhammad Iftekhar Junaid, residents of Dhaka, and Niaz Morshed from Fakirhat in Chattogram’s Mireshwarai.

Tarun Kanti Sikder, Director General (Additional Responsibilities) of Directorate of Post was contacted several times for enquiry, but there was no response. A message was sent to WhatsApp, but no reply was received.

When asked about change in ownership, Sajal Zahid, Head of Brand and Communications at Nagad, told The Daily Messenger, “The ownership has not changed. Only the logo has been updated. The logo has been modified to help us reach the public with a broader range of services. Nothing else has occurred beyond that.”

He further clarified, “The Bangladesh Post Office never owned Nagad. The ownership of Nagad remains with the directors and shareholders. Nagad was supposed to share revenue with the Bangladesh Post Office, with no discussion of profit sharing.”

Messenger/Fameema

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