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Monday, October 2, 2023

Launch Partners

ER2E to raise RM200 million (US$45.14 million) in next Sukuk offering

Econas Resource to Energy (ER2E) is looking to issue RM200 million (US$45.14 million) in its upcoming SRI Sukuk issuance for its waste management facility in Johor, Malaysia, ISFI has learned.

“We are looking at RM200 million on [our] next issuance,” Mohd Shafiee Mohd Sanip, an ER2E board director, told ISFI.

ER2E is targeting to complete its Johor project by Q4 2024, for which further Sukuk issuances are required.

ER2E issued its inaugural Sukuk worth RM96 million (US$21.67 million) under its RM500 million (US$112.85 million) SRI Sukuk program on the 7th March this year in two tranches consisting of a Kafalah guaranteed tranche by Danajamin Nasional (Danajamin) worth RM76.8 million (US$17.33 million) and a non-Danajamin-guaranteed tranche worth RM19.2 million (US$4.33 million).

The non-Danajamin-guaranteed tranche was backed by individual guarantees from the board of directors in addition to land collateral.

“In order to issue more additional Sukuk, ER2E will provide additional land collateral as well as individual guarantees for the Sukuk,” Mohd detailed.

To date, land assets with a market value of RM130 million (US$29.34 million) have been collateralized to Danajamin and AmInvestment Bank under the Sukuk program. Mohd noted that individual guarantees are in place throughout the issuances.

Upon completion of the Johor facility, the Sukuk program will finance waste management facilities in the states of Melaka and Pahang, Mohd shared.

According to RAM Sustainability, the sustainability arm of RAM Ratings which issued the second opinion report on ER2E’s ASEAN Sustainability SRI Sukuk Murabahah framework, ER2E entered into a joint venture with Malacca State Development Corporation to develop a waste management facility in Jasin, Melaka.

“My Econas Resource to Energy — a subsidiary under ER2E — has been set up to undertake this project,” RAM Sustainability noted.

Mohd further shared that ER2E will hold a signing ceremony for its Sukuk program with Danajamin/Bank Pembangunan Malaysia and AmInvestment Bank, the principal advisor of the program, in early April this year.

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