Launch Partners

Tuesday, November 29, 2022

Launch Partners

Case study: UiTM Solar Power Dua’s Sukuk

UiTM Solar Power Dua (USPD), a subsidiary of UiTM Energy & Facilities, has issued a 14-tranche Islamic medium-term note green Sukuk facility on the 3rd March 2021 worth RM100 million (US$22.07 million) under a one-time issue Murabahah green SRI Sukuk facility. The Sukuk issuance was arranged by Affin Hwang Investment Bank and has maturities ranging from one year to 14 years with the 14-year facility maturing on the 5th March 2035. The proceeds from the issuance will fund a solar power project which is expected to produce 812,487 MWh of electricity and create over 400 job opportunities throughout its 21-year life span.

UiTM Energy & Facilities is a private limited company in the renewable energy and energy efficiency business. It is a wholly-owned subsidiary of UiTM Holdings which, in turn, is a wholly-owned subsidiary of Malaysian public university Universiti Teknologi MARA (UiTM). USPD owns a 25 MWac large-scale solar photovoltaic power plant in Pasir Gudang, Johor. The proceeds from the Sukuk will be channeled toward the financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of the facility.

USPD signed a 21-year power purchase agreement with Tenaga Nasional to sell the energy generated from the plan at a fixed tariff to mitigate demand risk. The plant was targeted to be commercially operational on the 1st January 2020; however, due to the constraints as a result of the movement control orders, the plant became operational on the 2nd December 2020.

The Sukuk received an ‘AA-IS’ rating affirmation with a stable outlook on the 19th September 2022 from MARC Ratings for the RM97 million (US$21.18 million) outstanding amount under the facility. The rating agency expects USPD to be able to repay the second tranche of its Sukuk. “Its designated account balance of RM17.7 million (US$3.91 million) as at end-August 2022 is more than sufficient to meet the Sukuk repayment of RM5 million (US$1.1 million) in March 2023,” the rating agency said in a statement.

UiTM Energy & Facilities had also issued a RM240 million (US$52.98 million) green SRI Sukuk facility on the 27th April 2020 under another subsidiary, UiTM Solar Power.

UiTM Solar Power Dua Sukuk

RM100 million (US$22.07 million)
3rd March 2022
Summary of terms and conditions
Issuer
UiTM Solar Power Dua
Obligor
UiTM Holdings
Size of issue
RM100 million (US$22.07 million)
Mode of issue
Sukuk
Maturity
3rd March 2035
Purpose
To fund a solar power project
Issuance size
100%
Tenor
Tranche 1: one year
Tranche 2: two years
Tranche 3: three years
Tranche 4: four years
Tranche 5: five years
Tranche 6: six years
Tranche 7: seven years
Tranche 8: eight years
Tranche 9: nine years
Tranche 10: 10 years
Tranche 11: 11 years
Tranche 12: 12 years
Tranche 13: 13 years
Tranche 14: 14 years
Profit rate
Tranche 1: 3.3% Tranche 2: 3.35%
Tranche 3: 3.7%
Tranche 4: 3.85%
Tranche 5: 3.95%
Tranche 6: 4.05%
Tranche 7: 4.25%
Tranche 8: 4.35%
Tranche 9: 4.45%
Tranche 10: 4.6%
Tranche 11: 4.7%
Tranche 12: 4.8%
Tranche 13: 4.9%
Tranche 14: 5%
Currency
Malaysian ringgit
Lead arranger(s)
Affin Hwang Investment Bank
Principal advisor(s)
Affin Hwang Investment Bank
Governing law
Malaysian law
Legal advisor(s)/council
Zaid Ibrahim & Co – acting for the principal advisor
Zul Rafique & partners – acting for the issuer
Islamic structure
Murabahah (via Tawarruq arrangement)
Underlying asset
Shariah compliant commodities
Shariah advisor(s)
Masryef Management House
Rating
‘AA-IS’ by MARC Ratings

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