Interview with Khalid Quadir

The real driving force of Bangladesh’s economy comes from the private sector, as has been again validated by a major investment from a global institution in a multi-faceted industrial growth company such as ACI Motors Ltd. 

Mitsui Corporation, a Japanese conglomerate, and global investment leader, has acquired a substantial stake in ACI Motors through its Singapore-based subsidiary.

ACI Motors is a market leader in agricultural mechanization and the automotive sector. The company assembles and distributes branded agrarian machinery, including Yanmar, motorcycles from Yamaha of Japan, and Foton commercial vehicles from China.

This Mitsui partnership reiterates the generic strength of the Bangladesh private sector, boosted by its large consumer base and workforce. Such a development is particularly noteworthy as it follows a major political transition in the country just three months ago.

ACI Motors began its journey to attract foreign institutional investors in 2020 when a foreign private equity fund led by Khalid Quadir -- who pioneered private equity investments in Bangladesh and is the former managing partner of Brummer & Partners -- made its initial investment in ACI Motors Ltd. 

Tell us about BMA and why it invests in Bangladesh?

BMA is a closed-end private equity fund with international investors as its partners. These include FMO, the Dutch Development Bank, British International Investments, and Norfund. BMA seeks opportunities with high growth potential, strong developmental impact, and of course, the ability to deliver good financial returns for its investors.

In that context, ACI Motors is a leader in the mechanization of the agriculture sector -- after all, Bangladesh remains largely an agrarian country. When it comes to agricultural mechanization, the country is still in its early stages. In the automotive sector, ACI Motors has a close working relationship with Yamaha, one of the most coveted brands in the global motorcycle market. Yamaha is an unparalleled name in the automotive industry, and assembling and distributing Yamaha products is a crowning achievement for the company. The enormous potential for growth in both agricultural mechanization and the automotive sector convinced us that this was the opportunity we could not let go of.

What has been your investing experience so far in ACI Motors?

In the context of corporate governance practice in Bangladesh, ACI Motors stands out as a shining example. I believe they aspire to bring the best global practices to Bangladesh and they are well on their way. Since our investment, the company has experienced phenomenal growth. I am confident that ACI Motors will become the leading player in both the agricultural mechanization and automotive sector in Bangladesh in the coming years.

What are your thoughts on how BMA’s investment added value to ACI Motors?

Our foremost contribution has, of course, been the capital injection in the company. However, we also brought critical expertise in fostering good governance, so it can attract additional capital from global institutions. BMA’s investment in ACI Motors facilitated Mitsui’s interests in the company. Our involvement particularly through participation in the company’s board, provided confidence to potential investors, alongside the strong growth of ACI Motors' businesses.

I believe this partnership sets an excellent example for other strong companies in Bangladesh to follow. It demonstrates how aligning business practices with global standards can attract international investment from reputable institutions like Mitsui.

In today’s economic environment, businesses can no longer rely solely on borrowing cheap loans to grow. Borrowing is becoming increasingly expensive, and over-leveraging is becoming more restrictive, especially as local banks are facing rising non-performing loan (NPL) ratios and undergoing sector-wide reforms.

To attract foreign capital, Bangladeshi businesses must focus on better governance practices and maintaining a sensible and healthy balance sheet. The experience of ACI Motors and BMA highlights this path to success. By securing a partnership with a global investment house like Mitsui, we have created a win-win situation for Bangladesh, ACI Motors, and its investors. 

What are the potential sectors you look at for new investments?

We are generally looking at opportunities with significant growth potential to serve the population base in Bangladesh. That includes large manufacturing, agriculture, clean energy, and financial services sectors.

Billions of dollars of investible private risk capital are available in this world. Bangladesh has all the favourable macro fundamentals that are required to tap into those huge resources. Over-leveraging at the national or private sectors is not a healthy way to build a nation or businesses. Speedy removal of regulatory bottlenecks and building better and transparent governance at the national and private sector levels, Bangladesh will be able to tap into that huge financial pool to chalk out its speedier growth and important niche position in this dynamic world.

[Originally published in Dhaka Tribune on December 2, 2024]