Malaysian energy infrastructure project company Idiwan Solar issued a one-year RM50 million (US$11.76 million) Sukuk on the 19th January 2023. The fixed rate Murabahah facility carries a 7% coupon rate with a quarterly payment schedule.
Idiwan is an SPV established by Idiqa Holding and Hasilwan in 2018, with Idiqa Holding owning 95% of the shares of the SPV at the time of the lodging of its RM115 million (US$27.05 million) Sukuk Murabahah program in 2019. Idiqa Holding is a civil engineering and electrical works company while Hasilwan is an engineering firm specializing in renewable energy.
The recent issuance follows three Sukuk papers issued under the program in 2021 worth RM12 million (US$2.82 million) combined, all of which are set to mature in the first quarter of this year.
The infrastructure company is one of the developers for solar power plants in the state of Kelantan under a 21-year solar power purchase agreement with Malaysia’s largest electricity utility provider Tenaga Nasional. The other developer is BGMC Bras Power.
The solar power plants were initially planned to be funded by Sparks Energy 1’s proposed RM220 million (US$51.75 million) SRI Sukuk program. Sparks Energy 1 is an SPV established by Sparks Energy Group to raise funding to develop the 30 MW solar power plant.
The construction of the solar power plants is currently underway while the proposed Sparks Energy 1 SRI Sukuk has yet to be issued. Additionally, MARC withdrew its preliminary rating of ‘AA-IS’ for the proposed Sukuk on the 8th July 2022 citing concerns over the delayed commercial operating date.
Based on Sparks Energy 1’s initial plan, proceeds from the proposed Sukuk would be utilized to subscribe to Sukuk to be issued by Idiwan and BGMC BRAS Power. BGMC BRAS Power also issued a RM50 million Sukuk Murabahah facility on the 19th January 2023.
Sparks Energy 1’s plan however changed. The proposed issuance will instead be used to repay a RM220 million bridging loan from OCBC Bank Malaysia, which was used to subscribe to the unrated Sukuk issued by BGMC BRAS Power and Idiwan, according to a 2021 note by MARC Ratings.
According to the lodgment data for Idiwan’s Sukuk Murabahah program, the repayment of the Sukuk will primarily be from the cash flow of the power purchase agreement received by the issuer from Tenaga Nasional.
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Idiwan Solar’s Energy Sukuk 2023 RM50 million (US$11.76 million)  19th January 2023 |
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| Summary of terms and conditions | |
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Issuer |
Idiwan Solar |
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Size of issue |
RM50 million (US$11.76 million) |
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Tenor |
One year |
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Profit rate |
7% |
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Purpose |
To fund the construction of solar power projects |
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Payment |
Quarterly |
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Currency |
Malaysian ringgit |
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Maturity date |
19th January 2024 |
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Principal advisor, lead manager and lead arranger
|
OCBC Al-Amin Bank |
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Financial advisor
|
CIMB Investment Bank |
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Legal counsel(s) |
– Adnan Sundra & Low (acting for the principal advisor/lead arranger/lead manager). – Zaid Ibrahim & Co (acting for the issuer). |
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Independent Takaful advisor
|
Jardine Lloyd Thompson |
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Governing law |
Malaysian law |
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Islamic structure |
Murabahah via Tawarruq arrangement |
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Listing |
Malaysian Bond and Sukuk Information Exchange |
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Underlying asset |
Shariah compliant commodities |
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Rating |
Not rated |
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Shariah advisor |
Shariah advisory board of OCBC Al-Amin Bank |
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Tradability |
Yes |