Financial pressure ends Bengal Group’s Swissôtel project

Financial distress has forced Bengal Group to sell its under-construction Swiss Tower in Dhaka to Pubali Bank for Tk 800 crore, ending its decade-long plan to bring the Swissôtel luxury hotel brand to Bangladesh.

The conglomerate said heavy losses from the vandalism and arson at three of its Gazipur factories following the political changes of August 5, coupled with delays in insurance claim settlements, left it with little choice but to dispose of one of its biggest hospitality investments.

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Pubali Bank informed the stock exchanges on July 24 that it had decided to acquire the 57.64-katha plot and the under-construction building, known as Swiss Tower, on Dhaka’s Tejgaon Link Road.

“We had a dream of building a green, world-class hotel on this prime piece of land. But we are selling the asset to reduce our liabilities,” said Md Jashim Uddin, vice-chairman of Bengal Group.

Bengal Group suffered losses of around Tk 1,000 crore after three of its factories in Gazipur were vandalised and set on fire following the political changes of August 5, Jashim said.

The company has filed insurance claims for the damaged factories, but Bangladesh General Insurance Company (BGIC) has yet to settle them. “The delay in settling the insurance claims has put us under severe financial stress, leaving us with little option but to sell the property.”

Bengal Group signed an agreement with Swissôtel Hotels & Resorts, a brand under the multinational hospitality company Accor, in December 2015 to develop a five-star hotel in the capital.

The project was initially estimated to cost around Tk 600 crore and was scheduled for completion in 2021, but construction was delayed by the Covid-19 pandemic and the Russia-Ukraine war, significantly increasing development costs.

To finance the project, Bengal Group secured a $36 million (nearly Tk 295 crore) foreign loan from the International Finance Corporation (IFC) and the Netherlands Development Finance Company (FMO) through Mutual Trust Bank, Jashim said.

He added that the IFC had also agreed to finance hotel equipment after the building’s completion. In August 2015, Bengal Group had appointed Mutual Trust Bank to raise a further $50 million (around Tk 400 crore) to support the project.

The planned Swissôtel Dhaka was designed to feature 375 guest rooms and suites, six restaurants and bars, a ballroom, a spa, a swimming pool and other recreational facilities. Under the original arrangement, Zurich-based Swissôtel was to manage the hotel, while Bengal Hotels and Resorts would oversee day-to-day operations.

Founded in 1969, Bengal Group has grown into the world’s largest manufacturer of coat hangers, producing more than two million units a day. Its apparel division supplies denim products to global retailers including Walmart, Sainsbury’s, The Children’s Place and VF Corporation, and the conglomerate has since diversified into plastics, textiles, renewable energy, food, media, real estate and financial services.

For Pubali Bank, the acquisition offers a permanent corporate headquarters at a strategic commercial location after years of operating out of multiple rented offices near its Motijheel head office.

The bank had outgrown its existing headquarters at 26 Dilkusha, Motijheel, as expansion increased its workforce and operational requirements, said Md Anisur Rahman, the bank’s company secretary.

“Our current head office can no longer accommodate our needs,” Anisur said. “We have had to rent space in several nearby buildings, and the area we occupy outside the head office is now about twice the size of the office itself.”

Operating from multiple locations has created operational and administrative challenges, he said, with employees frequently moving between buildings for meetings and coordination.

The bank began looking for a larger office more than a year ago, Anisur said, and floated a tender last year that did not attract a suitable proposal in its first round.

A second round drew several bidders, and after multiple rounds of negotiation, the bank selected Bengal Group’s Swiss Tower as the most suitable property. The bank’s board has approved the purchase.

Because the building was originally designed as a hotel, the acquisition must go through several regulatory and procedural steps before ownership can be transferred.

Anisur said the acquisition process is expected to take six to seven months, while relocating the bank’s corporate office could take another one to one and a half years, depending on how quickly the remaining formalities are completed.