Landmark sukuk: (from left) Danajamin Nasional Bhd director of client coverage Gerald Goh, chief corporate and investment officer Amri Sofian, MD Mohamed Nazri Omar, Aik Hoe, Exsim deputy MD Lim Aik Kiat, Charanjeev Singh, Kwan and UOB (M) Bhd debt capital markets, investment banking director Audrey Chew during Exsim Group’s landmark RM3bil sukuk transaction.
EXSIM Development Group successfully established its first landmark RM3bil financial programme comprising RM2bil sukuk musharakah IMTN programme and a RM1bil sukuk murabahah Islamic commercial papers (ICP) programme through a special-purpose financial vehicle, Exsim Capital Resources Bhd.
On Jan 30, Exsim issued a real estate unbilled sales-backed sukuk facility, which is the first structured transaction in Malaysia to monetise progress billings involving multiple development projects, allowing Exsim to more efficiently manage its project development cash flows.
Exsim Capital floated the first tranche of its RM2bil 10-year sukuk musharakah programme which will monetise unbilled sales for executed property transactions. Under this programme, Exsim and its group of companies will sell their beneficial interest under the respective development projects.
The future progress billings with regard to the relevant development projects will be used to fund the remaining construction costs as well as to meet the issuer’s fees, expenses and obligations under each facility.
Despite being a privately-owned property developer, this Exsim innovative offering earned an investment grade rating of AA3/stable from RAM Rating Services Bhd, and Danajamin Nasional Bhd has also agreed to guarantee the liquidity support for the Tranche 1 Sukuk Musharakah.
For this first tranche issuance, the projects to be securitised under this financing programme are the Nidoz Residences & D’Nuri Residences projects located in Desa Petaling, Kuala Lumpur and is rated AA3/stable by RAM Ratings.
The RM290mil Tranche 1 IMTN is secured against 1,862 sales and purchase agreements (SPAs) for its Nidoz Residences & D’Nuri Residences projects while the unrated Tranche 1 ICP of up to RM130mil, which is meant to underwrite construction of Nidoz Residences & D’Nuri Residences developments and liquidity risk of Tranche 1 is guaranteed by Danajamin and fully underwritten by United Overseas Bank (Malaysia) Bhd.
The primary subscribers of the Tranche 1 IMTN are Great Eastern Malaysia, CIMB-Principal Asset Management and Sun Life Malaysia. The Tranche 1 IMTN was fully subscribed notwithstanding Exsim is a privately-held property developer and a first-time issuer in the Malaysian sukuk capital markets.
“RAM Ratings had applied a rigorous and extensive credit rating process to the Nidoz Residences & D’Nuri Residences projects to ensure institutional investors’ credit interest is mitigated and protected at all times. The credit rating accorded to the Tranche 1 IMTN is a reflection of Exsim’s efficient management execution, strong performance capability, a high percentage of lock-in sales backed by end financing and historical track record of completing projects on time and well within budget,” says Exsim Development Sdn Bhd managing director Lim Aik Hoe.
The sukuk structure is developed, arranged and advised by NewParadigm Capital Markets Sdn Bhd, a corporate finance advisory firm licensed by the Securities Commission.
“This sukuk is also the world’s first ever syariah-compliant structured transaction to monetise progress billings involving multiple projects. Therefore, it is a landmark in the Malaysian and global sukuk market,” said NewParadigm managing director Charanjeev Singh.
“NewParadigm is at the forefront of innovation in the Malaysian capital markets particularly in Islamic financing having structured award-winning sukuk transactions. This issuance demonstrates our continued commitment to persistently raise the bar in advancing the Malaysian capital markets and to promote Malaysia as an Islamic finance hub,” adds NewParadigm executive director Danny Kwan.
