Bextex, Bangladesh
The development of the textile industry in a poor South Asian country

Bextex is one of Bangladesh’s leading textile business. CDC’s first involvement with Bextex goes back to a start up investment in 1988 in Padma Textiles, a cotton spinning mill, with a further start up investment in 1994 in Beximco Textiles, a weaving and finishing plant. Bextex itself was the product of a 2006 merger between four listed textile companies, all of which were under the control of the Rahman brothers who have created a conglomerate spanning industries ranging from pharmaceuticals, real estate, and ceramics, employing 35,000 people. Beximco Pharmaceuticals is the only Bangladeshi company listed on the London stock exchange.

Beximco’s Chairman, Sohail Rahman, has recently described CDC’s investment as vital for Bextex’s development, but also describing its role as being more than just about the money. In particular, CDC’s investment was instrumental in enabling the company to gain further external borrowing, not least from the Asian Development Bank in what was their first investment in the private sector, as well as from the German fund, DEG. The advice of Actis, CDC’s fund manager, was also pivotal in rationalising the structure of the company and bringing about the 2006 merger that created Bextex.

Bextex has also been an industry leader in Bangladesh in recognising the value of expert managers to add professionalism to what originated as a family business. To complement this, Bextex places great emphasis on staff training and runs educational programmes for national Bangladeshi institutes such as the National Defence College. The company is also soon to reintroduce its road show for universities to highlight the value of high tech industry for economic development.

The Rahman brothers’ ultimate ambition is to create a textile company generating a US$1bn turnover. For this to happen, Bextex recognises that it must continue to pay close attention to the high standards it places upon ESG initiatives. For example, the company has environmental systems in place to control waste collection, reduce air pollution from its engine generators and use only AZO-free dyes on its products. Such environmental measures are complemented by a strong record of health and safety improvements and a real investment in staff welfare. It is instructive that in an industry plagued by strikes in Bangladesh, Bextex has remained unaffected.

ESG initiatives also add to Bextex’s attractiveness for international business clients. These clients are particularly sensitive to third party criticism and it is to the credit of Bextex’s management and governance structures that such companies remain comfortable placing repeat orders. Bextex’s international clients include JC Penny, Van Heusen, Walmart and Zara. This is also a reminder of how attention to ESG is instrumental in generating and maintaining business.

Textile manufacturing itself has become of vital importance to the Bangladeshi economy. In terms of scale, textile manufacture represents 74% of the country’s export market. The textile industry in Bangladesh now exports more even than its neighbour India. Bextex, in its earliest incarnation as Padma Textiles, was the company that began this process, and the original investment from CDC and the support offered alongside this has been instrumental for the company’s development. Beximco, the conglomerate company, now has 170,000 shareholders and represents 5.6% of the Dhaka Stock Exchange. This growth is testament to the value and potential that can be achieved through private sector investment in a country like Bangladesh.