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KPJ Healthcare to issue sustainable Sukuk early this year

KPJ Healthcare, a Malaysian private healthcare provider, is set to issue a sustainable Sukuk facility in early 2023, Norhaizam Mohammad, the officer in charge of KPJ Healthcare, told ISFI. The timeline and issuance size for the upcoming Sukuk have yet to be confirmed.

“Given that KPJ Healthcare has been awarded the ‘Gold’ Sustainability Sukuk Assessment for its Sustainability Sukuk Framework by the Malaysian Rating Corporation at the end of 2022, our next issuance in early 2023 will definitely be a sustainable issuance,” Norhaizam shared.

The healthcare provider is currently phasing out its maturing Sukuk issued on the 14th April 2015, the 23rd March 2018 and the 22nd June 2018 worth RM450 million (US$102.73 million) combined.

It has entered into a sale and leaseback agreement with AmInvestment Bank with the sale worth a total consideration of RM192 million (US$43.83 million) comprising a cash consideration of RM166.99 million (US$38.12 million) and an allotment and issuance of consideration units worth RM25.01 million (US$5.71 million).

Out of the total cash proceeds arising from the sale of land and buildings, the lion’s share of RM90 million (US$20.55 million) will be channeled toward Sukuk repayment. Notably, RM24.89 million (US$5.68 million) of the remaining cash proceeds will fund investments in the expansion of KPJ Healthcare’s hospitals.

“The expansion, which will pave the way for better access to quality healthcare benefiting the social and economic landscape, will definitely be aligned with our sustainability strategies in meeting the SDGs”, Norhaizam added.

The healthcare provider proposed a Sukuk Wakalah program with the flexibility to issue sustainable and non-sustainable Sukuk on the 12th January 2022 under its wholly-owned subsidiary Point Zone. On the 7th March 2022, it issued its first Sukuk under the newly established program in three tranches worth RM650 million (US$148.39 million) combined.

Maybank Investment Bank and OCBC Al-Amin Bank are the joint principal advisors, joint lead arrangers and joint sustainability advisors for the program. Affin Hwang Investment Bank, HSBC Amanah Malaysia, Maybank IB and OCBC Al-Amin Bank acted as the joint lead managers for the debut issuance.

According to MARC Ratings’s pre-issuance sustainability Sukuk framework assessment, the use of proceeds for sustainable Sukuk issued under the program will have positive environmental and social impacts and contribute to a number of SDGs including SDG 3 of good health and well-being.

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