The complex economics of providing affordable electricity to residents and businesses in Bangladesh is something Summit Group has been involved with for decades. Founded in the 1990s by Bangladesh native Aziz Khan, Summit’s ability to adapt and grow has led to it becoming the largest independent producer of electricity in the country.

Summit Group has driven this growth through a series of strategic moves made over the past decade. A turning point came in 2016, when Aziz Khan, in a deal that included financing from the International Finance Corporation, founded Summit Power International in Singapore. Khan made the move to give Summit access to more attractive financing options and boost its appeal to investors.

Singapore is widely considered one of the world’s economic powerhouses. It is known for its political stability, low corruption rates, and transparent public institutions. The country attracts large amounts of direct foreign investment to South Asia and is a leader in the Association of Southeast Asian Nations (ASEAN).

Tapping into what Singapore offers in terms of a mature, regulated financial and business system immediately boosted Summit’s standing with potential investors. Ayesha Khan, managing director and chief executive officer at Summit Power International, said the move paved the way for the company’s success in attracting direct foreign investment.

The initial investment, led by IFC, provided $175.5 million for Summit Group’s future projects. “They (IFC) invested in the Singapore structure, which helped the Singapore structure to invest back into Bangladesh,” said Ayesha Khan. “So, that was a very important transition period for us. It changed the way we started doing business.”

She later added, “This is something that is very important to us — that we keep working in Singapore and be able to access competitive financing.”

What Is the International Finance Corporation?

Founded in 1956, IFC is a member of the World Bank Group dedicated to promoting private sector development in emerging markets. IFC provides investment and asset management services to encourage private enterprise growth in developing countries.

The organization operates in more than 100 countries. IFC offers a variety of financial products, including loans and equity investments, such as the one made with SPI. Its primary focus areas include agribusiness, infrastructure, manufacturing, and financial markets.

In 2024, the IFC committed a record $56 billion to private companies and financial institutions in developing countries, a 28% increase from the previous year, according to Reuters.

Bringing Down the Cost of Supplying Electricity in Bangladesh

Collaborations between IFC and SPI have led to improvements in Bangladesh's power infrastructure, contributing to increased electricity generation capacity and supporting the country's economic development.

Summit Group now operates as the largest infrastructure conglomerate in Bangladesh, with investments in the energy sector, ports, logistics, and information technology. SPI manages all power-related operations.

Ayesha Khan pointed out that the move to Singapore and the IFC investment allowed SPI to borrow money at a lower cost. That, in turn, enables them to offer electricity in Bangladesh at lower rates.

She noted that the company continually focuses on bringing down its weighted average cost of capital (WACC), a metric used by investors to assess the desirability of an investment. WACC essentially measures the average rate a company expects to pay to finance operations, weighing both debt and equity financing.

“We have to work to bring our weighted average cost of capital down. And the only way of doing that is by borrowing in the U.S. dollar, which has the lowest cost of borrowing right now and historically has for the last 30 to 40 years,” Ayesha Khan said. “And I see that trend continuing for the next 30 to 40 years as the dollar remains the major currency of the world. So, we need to be able to borrow in U.S. dollars.”

The move to Singapore opened the door to borrow U.S. currency at interest rates lower than those in Bangladesh, which are currently about 14%. Summit Group now is an attractive investment option for global investors such as IFC, the Asian Development Bank, the Islamic Development Bank, and the Export Credit Agency in Switzerland.

“These entities are very important because they have the ability to give long term loans and lower interest rate costs because their cost of borrowing is much lower than a commercial bank sitting in Bangladesh,” said Ayesha Khan.

She added, “I'm not saying it is impossible to attract dollar financing sitting in Bangladesh. But the tender becomes much shorter and the cost of borrowing becomes much higher. Our aim is to bring our weighted average cost of capital down. That is what makes it possible to provide a low price for electricity.”

Lowering Electricity Costs in Bangladesh

Aziz Khan says he’s happy his professional life led him to a position where he has helped drive the rapid growth in Bangladesh, one of the fastest-growing economies in Asia. His company built the first power plant in Bangladesh in 1997. SPI now has 18 power plants. SPI also operates Bangladesh’s second floating storage and regasification unit and liquefied natural gas import terminal.

However, Ayesha Khan said it’s vital to explain why one of Bangladesh’s biggest power providers operates out of Singapore. “I think there's a lot of misunderstanding because it is a complicated process to understand the steps we have taken to attract financing,” she said.

The list of investments attracted by Summit Group is long. The initial $175.5 million deal involved IFC, the IFC Asset Management Company (through its IFC Emerging Asia Fund), and EMA Power, a joint venture between Daelim Energy and the Islamic Development Bank Infrastructure Fund II. The deal involved the investors purchasing equity in SPI.

In March 2019, Summit and General Electric agreed to develop a 583 megawatt combined cycle power plant in Meghnaghat, Bangladesh. GE, through its subsidiary GE Capital's Energy Financial Services, provided equity investment and supplied advanced gas turbine technology for the project.

Also in 2019, Japan’s Jera Co. acquired a 22% stake in SPI for $330 million. IFC, the IFC Emerging Asia Fund, and EMA Power exited their positions as shareholders with this deal. However, IFC continues to be a significant lender to Summit.