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Friday, September 30, 2022

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KAB Energy Power’s Sukuk: Funding green ventures

A wholly-owned subsidiary of Malaysian engineering company Kejuruteraan Asastera (KAB), KAB Energy Power (KABEP) has issued the first tranche of its multicurrency Sukuk Murabahah program worth RM500 million (US$119.56 million).

Tranche 1 of the Sukuk program, which was first established in September 2021, was an issuance of Islamic medium-term notes structured under the Murabahah concept and worth a total of RM19.95 million (US$4.77 million).

Proceeds from the issuance is earmarked for KABEP’s wholly-owned subsidiary, Dynagen Power, to redeem the latter’s existing conventional financing facility, and also to fund the minimum balance and build-up requirement in the Sukuk tranche’s designated accounts.

The Islamic facility is also expected to support KAB’s expansion into the renewable and green energy solutions sectors, helping fund the company’s future energy-related ventures, greenfield projects and brownfield assets in Malaysia, including a 2.2-megawatt waste heat recovery facility in Negeri Sembilan, as well as across Asia (including Vietnam, Indonesia and India).

Most recently, KAB signed an agreement to acquire a mini-hydropower plant in North Sumatera, Indonesia.

Malaysian financial guarantee insurer Danajamin Nasional has guaranteed the tranche. “By encouraging energy efficiency initiatives, we want to continue playing a significant role in contributing to the nation’s economic sustainability and leave a positive impact in minimizing the environmental footprint. We hope to see more Malaysian companies participating in the green economy in the future,” said Mohamed Nazri Omar, CEO of Danajamin.

KAB Energy Power’s Sukuk
RM19.95 million (US$4.77 million)
31st January 2022
Issuer KAB Energy Power
Structure Sukuk Murabahah
Maturity date 31st January 2052
Lead arranger and principal advisor Public Investment Bank
Type Islamic medium-term notes
Currency Malaysian ringgit
Solicitors Albar & Partners
Shariah advisor Amanie Advisors
Guarantor Danajamin Nasional
Governing law Malaysian law

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