Sime Darby Property (SDP), a spinoff of Malaysia’s government-linked trading conglomerate Sime Darby, issued its debut sustainability Sukuk as part of a RM600 million (US$129.03 million) issuance to fund its land acquisition efforts.
Oversubscribed by more than eight times with an orderbook in excess of RM4.8 billion (US$1.03 billion), the three-tranched issuance is part of SDP’s RM4.5 billion (US$967.74 million) Sukuk Musharakah program established in 2009.
The proceeds from the facilities will be utilized to meet its future investments and service its debt obligations.
“We are looking at the Sukuk primarily financing our land acquisitions. Part of the Sukuk, which we have about RM200 million (US$43.01 million), will finance sustainable projects,” Azmir Merican, the group managing director of SDP, told IFN.
In May this year, SDP’s shareholders approved the acquisition of three parcels of freehold land in Kapar, Selangor for a cash consideration of RM618 million (US$132.9 million). The gross development value of the land is estimated at RM5 billion (US$1.08 billion) to RM6 billion (US$1.29 billion).
According to Azmir, the acquisition will play a significant role in the company building a sustainable real estate portfolio.
SDP’s sustainability Sukuk efforts date back to 2020 with the establishment of its Sustainability Sukuk Framework three years prior to its Islamic sustainable capital market debut.
Under the framework, the proceeds from the sustainability facilities will be channeled toward projects under the categories of pollution prevention and control, energy efficiency and affordable housing, among others.
As part of its energy efficiency agenda, SDP partnered with the government to roll out a rooftop solar pilot project in conjunction with the recently launched National Energy Transition Roadmap.
This initiative would likely see the property developer implement rooftop solar energy solutions to 10,000 homes over the next five years.
While SDP is a regular Islamic capital market issuer with an available limit of RM3.1 billion (US$666.67 million) under its existing Sukuk program, Azmir shared with IFN that the property developer has no plans to issue further Sukuk in the next 12 to 18 months.
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Sime Darby’s Land Acquisition Sukuk RM600 million (US$129.03 million)  21st August 2023 |
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| Summary of terms and conditions | |
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Issuer |
Sime Darby Property |
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Size of issue |
Tranche 1: RM300 million (US$64.52 million) Tranche 2: RM200 million (US$43.01 million) Tranche 3: RM100 million (US$21.51 million) |
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Mode of issue |
Competitive tender, direct placement, bookbuilding |
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Purpose |
To meet future investment needs and service debt obligations |
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Tenor |
Tranche 1: Five years Tranche 2: Three years Tranche 3: Seven years |
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Profit rate |
Tranche 1: 4.14% Tranche 2: 4.08% Tranche 3: 4.28% |
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Payment |
Semi-annual |
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Currency |
Malaysian ringgit |
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Maturity date |
Tranche 1: 21st August 2028 Tranche 2: 21st August 2026 Tranche 3: 21st August 2030 |
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Lead manager(s) |
CIMB Investment Bank, Maybank Investment Bank, Public Investment Bank |
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Principal advisor(s) |
Maybank Investment Bank |
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Bookrunner(s) |
CIMB Investment Bank, Maybank Investment Bank, Public Investment Bank |
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Governing law |
Malaysian law |
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Legal advisor(s)/council |
Zaid Ibrahim & Co acting on behalf of the joint lead managers, Zul Rafique & Partners acting on behalf of the issuer |
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Islamic structure |
Musharakah |
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Rating |
‘AA+IS’ by MARC Ratings |
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Shariah advisor(s) |
Shariah committee of Maybank Islamic |