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Saturday, May 25, 2024

Launch Partners

Fairview Valley to issue Sukuk with sustainability-linked features

Fairview Valley has signed a subscription agreement with CIMB Investment Bank and CIMB Islamic Bank, CIMB collectively, for its proposed RM360 million (US$80.18 million) Sukuk Murabahah program. Fairview Valley is the property development, property investment and investment holding subsidiary of IJM Corporation (IJM). The Sukuk proceeds will refinance existing facilities that were used to fund the construction of Menara Prudential, a 27-storey Grade A, Leadership in Energy and Environmental Design Gold-certified, MSC Status office tower. MSC Status is a recognition granted by the Malaysian government through the Multimedia Development Corporation to companies that participate in and undertake information and communication technology activities.

CIMB has been appointed as the sole lead arranger, sole lead manager and sole Shariah advisor for the Sukuk Murabahah program. CIMB will also fully subscribe to the issuance, which is still pending according to Securities Commission Malaysia (SC)’s list of corporate bonds and Sukuk under the Lodge and Launch Framework.

“We are pleased to partner with IJM in meeting their financing needs for Menara Prudential, a world-class green building. This transaction not only demonstrates IJM’s commitment to sustainability, but also CIMB’s commitment to advancing Islamic and sustainable finance, aligned with the practices of value-based intermediation,” said Abdul Rahman Ahmad, group CEO of CIMB Group Holdings and CEO of CIMB Bank.

The proposed program will incorporate sustainability-linked features with pre-agreed targets including energy and water efficiency performance indicators and renewable energy composition of the assets. Fairview Valley will be incentivized to meet the pre-agreed targets through triggered profit rebates, thus reducing financing costs for the issuer.

While yet to be confirmed, the sustainability-linked features of the proposed program may be issued under the SC’s recently launched Sustainable and Responsible Investment Sukuk Framework. Issuing under the new framework would allow for a broader use of proceeds for the issuer, allowing for proceeds to be used for general corporate purposes.

While the proposed program will be the inaugural issuance for Fairview Valley, IJM has had notable experience issuing Sukuk with an existing RM3 billion (US$668.21 million) Sukuk Murabahah program. Additionally, IJM Land, another subsidiary of the corporation, has an existing RM2 billion (US$445.47 million) perpetual Sukuk Musharakah program. The programs have been assigned ‘AA3/Stable’ and ‘A2(s)/Stable’ ratings respectively.

CIMB also acted as the sole lead arranger, sole lead manager and sole Shariah advisor for the IJM Land Sukuk Musharakah program. The Fairview Valley Sukuk program will be IJM’s first Sukuk with sustainability features.

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