Launch Partners

Monday, October 2, 2023

Launch Partners

Case study: KPJ Healthcare’s Sukuk – Malaysia’s first private sector healthcare SRI Sukuk

KPJ Healthcare (KPJ) issued a RM555 million (US$125.48 million) three-tranche sustainability Sukuk facility on the 13th March 2023 via its subsidiary Point Zone (M). According to Shafiq Sheikh Mohamed, a director and the head of Islamic and sustainable finance investment banking at OCBC Bank, the facility is the first sustainability Sukuk issued by a private healthcare provider in Malaysia.

ISFI previously reported on the 10th January this year that the healthcare provider was looking to issue its first sustainability Sukuk in early 2023.

This facility is the second issuance and first sustainability issuance under a RM3 billion (US$678.29 million) program, which has the flexibility to issue sustainable and non-sustainable Sukuk.

The sustainability offering was upsized from its initial size of RM450 million (US$101.74 million). The final orderbook recorded a bid-to-cover ratio of 11.7 times against the initial targeted issue size at the initial price guidance (IPG) of Malaysian Government Security (MGS) plus 100bps.

“The oversubscription led to an upsizing of the issue amount to RM555 million and a price tightening by 20bps from the IPG to a final spread of MGS plus 80bps across all tenors.

The strong investors’ response, which resulted in [an] optimal funding cost for KPJ, reflects the confidence by investors in KPJ’s overall business and financial positions…,” Shafiq told ISFI.

Asset managers represented the majority of the investors in this facility at 53% with financial institutions, government agencies and insurance companies comprising the remaining investors.

The Sukuk proceeds will be used by KPJ to finance or refinance eligible projects including those under the categories of access to essential services and socioeconomic advancement and empowerment. “A significant proportion of projects under the ‘Access to Essential Services’ social project category will reside outside the four walls of the hospital and will contribute toward improving primary healthcare access which is increasingly central to the achievement of universal health coverage,” a statement from MARC Ratings, which assigned a ‘Gold’ impact assessment to KPJ’s Sustainability Sukuk Framework, read.

KPJ’s Inaugural Sustainability Sukuk

RM555 million (US$125.48 million)

13th March 2023
Summary of terms and conditions
Point Zone (M)
KPJ Healthcare
Size of issue
RM555 million (US$125.48 million)
Mode of issue
Finance and/or refinance eligible capital expenditures and working capital, existing borrowings, operating expenses and other expenses related to KPJ Group’s new or existing healthcare assets, businesses, projects and/or products as defined in its Sustainability Sukuk Framework
Tranche 1: RM150 million (US$33.91 million)
Tranche 2: RM175 million (US$39.57 million)
Tranche 3: RM230 million (US$52 million)
Tranche 1: Five years
Tranche 2: Seven years
Tranche 3: 10 years
Profit rate
Tranche 1: 4.5%
Tranche 2: 4.69%
Tranche 3: 4.86%
Maturity date
Tranche 1: 13th March 2028
Tranche 2: 13th March 2030
Tranche 3: 11th March 2023
Malaysian ringgit
Principal advisor(s)/lead arranger(s) and sustainability Sukuk advisor(s)
OCBC Al-Amin Bank, Maybank Investment Bank
Lead manager(s)
OCBC Al-Amin Bank, Maybank Investment Bank, Affin Hwang Investment Bank, HSBC Amanah
Governing law
Malaysian law
Legal advisor(s)/council
Adnan Sundra & Low
Islamic structure
Wakalah Bi Istithmar
Underlying asset
Crude palm oil
‘AA-IS (CG)’ by MARC Ratings
Sustainability Sukuk Framework rating
‘Gold’ sustainability Sukuk assessment by MARC Ratings
Shariah advisor(s)
OCBC Al-Amin Bank, Maybank Islamic

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