Strong investor interest in Edra Solar's RM245m sukuk

  • Corporate News
  • Thursday, 03 Oct 2019

Solar Kuala Ketil

KUALA LUMPUR: The bookbuilding for Edra Solar Sdn Bhd’s RM245mil solar socio-agricultural Sukuk received overwhelming interest with a bid to cover ratio of more than 11 times.

OCBC Al-Amin Bank Bhd, acting as Edra Solar's Sukuk sustainability framework adviser and lead arranger, said it led a roadshow on Sept 30 for the book building for all eight tranches of the Sukuk with tenors ranging between one and 18 years.

“Interest from investors never wavered throughout the day, which allowed the Sukuk to tighten overall yields and yet maintain a final bid to cover ratio of more than 11 times at the close of business day,” it said.

OCBC Al-Amin said there was overwhelming demand from high quality investors ranging from insurance companies, asset management companies and high net worth investors (representing their maiden investment into the sector).

This enabled the bank to create new benchmarks in the Sukuk market with Malaysia’s First Asean Sustainability Sustainable and Responsible (SRI) Sukuk.

Edra Solar, the owner and operator of a 50MWac solar power plant in Kedah, is a subsidiary of China General Nuclear Power Corporation (CGN).

CGN as a group has a sizeable portfolio of renewable energy projects encompassing wind, solar and biomass power in China, Singapore, France, Australia, South Korea, the US, the UK and Namibia.

As part of Edra Group’s CSR commitment towards the social and economic development of the communities where the group operates, Edra Solar allocated to the local community 40 acres (more than 15% of the plant) of the buffer zone surrounding the Plant for farming of pineapple and other crops.

The agriculture project will be managed by Pertubuhan Peladang Kuala Ketil together with local farmers in terms of capital, risks and rewards. Edra Solar will not be deriving any economic benefit from this agriculture project.

OCBC Al-Amin said combining the plant’s design to conform to Malaysia’s renewable energy commitments and the social benefits of the agriculture project, the project was anticipated to create both positive environmental and social effects that are also consistent with the United Nations Sustainable Development Goals.

OCBC Bank (Malaysia) Bhd managing director/senior banker, client coverage and head of investment banking, Tan Ai Chin said OCBC’s pioneering role in sustainable and responsible financing has allowed it to work with clients to bring high quality and socially responsible Sukuk to investors.

“It is a testament of our pledge to drive towards a low carbon and self-reliant society.

“The success of Edra Solar’s Sustainability SRI Sukuk is a good example of how focusing on the sustainability agenda, which combines the social and environment factors as pillars to a project, allows project sponsors to derive the most optimal financing for their projects,” she said.

Tan said this was the first Solar Sukuk to undertake a transparent price discovery process via a book building mode of issuance which ultimately allows the project to achieve an optimal cost of funding and efficient distribution to a wide range of investor base.
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