Project & Infrastructure Finance Deal of the Year
Malaysian national electric utility company Tenaga Nasional (TNB), in partnership with Mitsui & Co, on the 4th December 2015 successfully closed a RM8.98 billion (US$2.04 billion) Sukuk Murabahah in nominal value through their SPV, Jimah East Power (JEP). In an exclusive interview with Mohamad Safri Shahul Hamid, the senior managing director and deputy CEO of CIMB Islamic, NABILAH ANNUAR provides a comprehensive insight on the deal.
At the option of the issuer, the Sukuk was structured according to the Shariah contract of Murabahah (via Tawarruq arrangement) utilizing soybean as the underlying commodity. Proceeds from the Sukuk will be utilized for the financing of the 2,000 MW coal-fired power plant project and associated facilities, including the transmission line and interconnection facilities, to be located at Kuala Lukut, Negeri Sembilan, south of Malaysia.
JEP was established to fund the development of the power plant which it earlier procured from the controversial sovereign wealth fund, 1Malaysia Development (1MDB). Incorporated in 2013 by 1MDB and Mitsui & Co as an SPV, the power plant was scheduled to be operational in the second half of 2019.
JEP’s 70% stake was acquired by TNB for approximately RM46.98 million (US$10.66 million) in July 2015, with Mitsui’s 3B Power holding the remaining 30% stake.
Commenting on the challenge faced in the process of finalizing the transaction, Safri relayed: “The Sukuk Murabahah was issued in one lump sum during challenging market conditions. Managing the investors was key in ensuring the successful implementation of the transaction.” Attracting Malaysian investors, the Sukuk was raised via a book-building and private placement exercise.
“The Sukuk Murabahah will further contribute to the growth of the Islamic finance industry, particularly substantially increasing the amount of corporate Sukuk issued in 2015 based on the sizable RM8.98 billion issue amount,” highlighted Safri. The Sukuk is a one-off issuance and has been conferred a rating of ‘AA-IS’’ by MARC.
Summary of terms & conditions |
|
Issuer |
Jimah East Power |
Size of issue |
RM8.98 billion (US$2.04 billion) in nominal value |
Mode of issue |
Book-building and private placement basis |
Purpose |
The proceeds of the Sukuk Murabahah shall be utilized for the Shariah compliant purposes in connection with the financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of a 2,000 MW coal-fired power plant in Kuala Lukut Mukim Jimah, Negeri Sembilan. |
Tenor |
Up to 23 years |
Issuance price |
100% |
Payment |
Semi-annual basis |
Currency |
Malaysian ringgit |
Maturity date |
3rd December 2038 |
Lead managers and bookrunners |
CIMB Investment Bank, HSBC Amanah Malaysia and Maybank Investment Bank |
Principal advisors |
CIMB Investment Bank and HSBC Amanah Malaysia |
Governing law |
Laws of Malaysia and exclusive jurisdiction of the courts of Malaysia |
Legal advisors |
Adnan Sundra & Low – solicitor to the joint principal arrangers, lead advisors and lead managers. Zaid Ibrahim & Co – solicitor to the issuer. |
Listing |
May be listed on Bursa Malaysia Securities under the exempt regime if the issuer so decides |
Underlying assets |
Shariah compliant commodities (soybean) |
Rating |
‘AA-IS’ by MARC |
Shariah advisors |
CIMB Islamic Bank and HSBC Amanah Malaysia |
Structure |
|
Tradability |
Tradable and transferable |
Investor breakdown |
Via book-building and private placement basis |
Face value/minimum investment |
RM8.98 billion in nominal value |