EXSIM issues landmark sukuk transaction
Focus Malaysia 11 Feb 2019 13:00
Exsim Development Group (“Exsim”) has successfully established its first landmark RM3.0 billion financial programme comprising RM2.0 billion Sukuk Musharakah IMTN Programme (“Sukuk Musharakah or IMTN Programme”) and a RM1.0 billion Sukuk Murabahah ICP Programme (“Sukuk Murabahah or ICP Programme”) through a special- purpose financial vehicle, Exsim Capital Resources Berhad (“Exsim Capital” or the “Issuer”).
On 30 th January 2019, 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 RM2.0 billion 10-year Sukuk Musharakah Programme which will monetize 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 won an investment grade rating of ‘AA3/Stable’ from RAM Ratings and Danajamin Nasional Berhad (“Danajamin”) 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 Rating Services Berhad (‘RAM Ratings’). The RM290 million Tranche 1 IMTN is secured against 1,862 SPAs for its Nidoz Residences & D’Nuri Residences projects in Desa Petaling, Kuala Lumpur whilst the unrated Tranche 1 ICP of up to RM130 million, 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 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.” explains Lim Aik Hoe, Managing Director, Exsim Development Sdn Bhd.
The Sukuk structure is developed, arranged and advised by NewParadigm Capital Markets Sdn Bhd, a corporate finance advisory firm licensed by the Securities Commission Malaysia.
“This Sukuk is also the world’s first ever Shariah compliant structured transaction to monetise progress billings involving multiple projects. Therefore, it is a landmark in the Malaysian and global Sukuk market.” said Charanjeev Singh, Managing Director of NewParadigm Capital Markets Sdn Bhd.
“NewParadigm Capital Markets is at the forefront of innovation in the Malaysian capital markets particularly in Islamic financing having structured award winning landmark 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 Danny Kwan, Executive Director of NewParadigm Capital Markets Sdn Bhd.