Race Asset Management parks funds in risky ventures: analysts

Bangladesh’s top funds management firm has placed over 35 percent of its mutual assets in highly risky ventures, betraying the cause of thousands of small investors who trusted the company with their money.

Staff Correspondentbdnews24.com
Published : 27 Oct 2019, 03:54 PM
Updated : 27 Oct 2019, 03:54 PM

The amount at risk is over Tk 10 billion, all invested in illiquid non-listed securities, according to publicly available statistics.

The firm, Race Asset Management, the largest by the size of the assets at its disposal, has under its belt 10 of the 37 mutual funds in Bangladesh. The funds have assets, owned by unit holders, worth nearly Tk 30 billion.

In addition to its investment in distressed Farmers Bank to the tune of over Tk 700 million, Race has sizeable investments in a stock brokerage company, Multi Securities, which is at least Tk 870 million, and a staggering Tk 4.86 billion in Premier Bank’s unlisted securities.

A listed company could have unlisted securities such as the ones held in bonds which are not traded on stock market, for example.

“This is one of the key reasons why the Race-managed Mutual Fund shares trade below Tk 3 (three) against the face value of Tk 10 per share,” said one market analyst, requesting anonymity.


“The key question is: what has BSEC done to either approve or review these investments?”

There is more in the Race basket of risky investments. It has given Best Holding Convertible Bond Project a whopping Tk 2.5 billion.

“At a minimum the investors can demand transparency regarding these investments and must have adequate information to evaluate the accuracy of Net Asset Values of these funds,” said another market analyst, who fearing reprisals asked for anonymity.

“These funds are NOT government funds but that of investors who deserve transparency and the role of the manager is to ensure these investments are not misused,” said the second analyst.

“The riskiest was probably the investment in Farmers Bank which was renamed Padma Bank,” the second analyst said. “Just look at the size of the investment in a brand new bank when there already were so many banks.”

“One must not forget mutual funds represent small investors,” the second analyst said.

Chowdhury Nafeez Sarafat, chairman of Race Asset Management and Padma Bank, told bdnews24.com: “I don’t take care of the RACE issues. Speak to my managing director.”

Chowdhury Nafeez Sarafat

Asked to comment on the risky investments by Race, Bangladesh Securities and Exchange Commission spokesman Saifur Rahman said: “I am not aware of the details. I’ll have to get more information from the related department first.”

“That is even worse. BSEC is endorsing a very risky investment,” the second analyst said.

“Even after all this money, this bank is still insolvent.”

Both analysts said a section of BSEC officials are not doing their job right.

Prof Mizanur Rahman who teaches accounting at Dhaka University blamed the “mismanagement” of the asset management companies for the “bad condition” of the mutual funds in Bangladesh. “They are investing recklessly without thinking about the small investors,” Rahman said.

“No steps have been taken against those who made such investments.”