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Sunday, May 28, 2023

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Case study: Ekovar’s second green Sukuk facility

Turkish recycling company Ekovar Cevre Grup Geri Donusum Atik Depolama Insaat Taahhut Sanayi Ve Ticaret (Ekovar) has on the 10th March 2023 issued a one-year green Sukuk facility worth TRY50 million (US$2.58 million) via Emlak Participation Bank’s SPV, Emlak Varlik Kiralama.

The facility represents the waste management company’s second issuance following Ekovar’s previous TRY50 million facility issued on the 14th September 2022. Notably, the sophomore facility has double the maturity as compared with its previous issuance.

“After receiving the approval of Ekovar’s Green Sukuk Al Wakalah program amounting to TRY100 million (US$5.16 million) from [the] Capital Markets Board of Turkiye this year, … we increased our Sukuk maturity from six months to one year in difficult market conditions when compared to the previous issuance,” Esma Karabulut, the head of investment banking and investor relations at Emlak Participation Bank, told ISFI.

Investors of the facility comprise Islamic pension and investment funds, contrasting with the previous issuance, which also saw participation from corporate investors who contributed to 30% of total investors.

In accordance with the waste-management company’s green financing framework, proceeds from this Sukuk facility will be channeled toward green projects within one month of the issuance date.

According to its Sukuk Allocation and Impact Report for its debut issuance, Ekovar has reduced its net carbon emissions by 31,311 tons as a result of its scrap waste recycling activities. The proceeds from the first issuance also contributed to six UN SDGs including SDG 11 of sustainable cities and communities.

According to Esma, in light of the recent 2023 Turkiye-Syria earthquake, Ekovar has used a portion of the green Sukuk proceeds from its previous issuance to finance debris removal and recycling of waste products in earthquake-effected regions in Turkiye.

ISFI previously reported that the waste management company followed its second issuance with a TRY50 million facility on the 4th  April this year, maxing out its approved issuance quota from the Capital Markets Board for this year.

Ekovar’s Second Green Sukuk

TRY50 million (US$2.58 million)

4th April 2023
Summary of terms and conditions
Emlak Varlik Kiralama (100% subsidiary of Turkiye Emlak Katilim Bankasi)
Ekovar Cevre Grup Geri Donusum Atik Depolama Insaat Taahut Sanayi Ve Ticaret (EKOVAR)
Size of issue
TRY50 million (US$2.58 million)
Mode of issue
Sale to qualified investors
To purchase specific scraps to be recycled
One year
Issue date
10th March 2023
Maturity date
10th March 2024
Profit rate
Periodic payment and principal amount will be paid at maturity
Turkish lira
Lead manager(s)
Turkiye Emlak Katilim Bankasi
Turkiye Emlak Katilim Bankasi
Governing law
Turkish law
Legal advisor(s)/council
Mutlu Avukatlik Ortakligi
Islamic structure
Green Sukuk Wakalah
BIST- Istanbul Stock Exchange
Underlying asset
Non-hazardous waste to be recycled
‘TR BBB+/Pozitif’ by DRC Ratings
Shariah advisor(s)
Turkiye Emlak Katilim Bankasi’s Shariah committee
Face value/minimum investment
TRY10,000 (US$516.08)

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