Sinar Kamiri issued RM245 million (US$52.64 million)-worth of SRI Sukuk to develop a photovoltaic solar power generation plant in Kuala Kangsar, Perak on the 31st January 2018. The 15-tranche Sukuk Wakalah issuance was advised by AmInvestment Bank.
In addition to the one-off green SRI Sukuk issuance, the 49 megawatt in alternating current power plant was financed by an equity injection from its sponsor Mudajaya Group (Mudajaya) via its Mudajaya RE shareholder, representing the remaining 20% of the total RM306.25 million (US$65.79 million) expected cost of the project.
The Sukuk facility is structured such that the proceeds will be generated through the income from the power plant at a proportion of at least 33% while the remainder will be generated by commodity Murabahah investments.
“The ratio of at least 33% of the value of the Wakalah investments is only applicable at the point of initial investment for the Green SRI Sukuk Wakalah and does not need to be maintained throughout the tenure of the Sukuk,” the documentation for the facility clarified.
Notably, the utilization of the Sukuk proceeds also includes the repayment of a bridging financing facility of up to RM10 million (US$2.15 million) to part-finance the procurement of equipment for the project from UOB Malaysia, which is an arranger for the Sukuk alongside AmInvestment Bank.
UOB Malaysia also granted a letter of credit facility of up to US$31 million to the company for the same purpose, to which the Sukuk proceeds will also be channeled for repayment.
In connection with the project, UOB Malaysia also issued a bank guarantee of up to RM6.5 million (US$1.4 million) on behalf of Mudajaya. Separately, UOB Malaysia issued an RM8.82 million (US$1.89 million) performance guarantee on behalf of Mudajaya in favor of Tenaga Nasional to secure the payment of the compensation by Sinar Kamiri as part of the power purchase agreement.
The power plant, which commenced operations in November 2018, has been recording a lower-than-projected electricity output over the past few years. The electricity output for 2022 fell short of the projected mark by 1.7% due to lower irradiance at the project site.
MARC Ratings, which reaffirmed the facility’s ‘AA-IS’ rating with a stable outlook in March this year, opines that while the plant’s power generation has been consistently shy of its projected output by a minimal margin, the positive rating is largely underpinned by Sinar Kamir’s 21-year power purchase agreement with Tenaga Nasional.
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Sinar Kamiri’s SRI Solar Sukuk RM245 million (US$52.64 million)  30th January 2018 |
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| Summary of terms and conditions | |
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Issuer |
Sinar Kamiri |
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Size of issue |
RM245 million (US$52.64 million) |
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Mode of issue |
Private placement, bought deal bookbuilding
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Purpose |
To develop a 49 MWac photovoltaic power plant in Kuala Kangsar, Perak
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Tenor |
Six to 18 years
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Issuance price |
100% |
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Profit rate |
5.28–6.35%
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Payment |
Semi-annual |
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Currency |
Malaysian ringgit |
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Maturity date |
30th January 2036 |
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Arranger(s) |
AmInvestment Bank, UOB Malaysia |
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Principal advisor(s) |
AmInvestment Bank |
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Governing law |
Malaysian law |
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Legal advisor(s)/council |
Albar & Partners |
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Islamic structure |
Wakalah, Murabahah via Tawarruq arrangement |
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Underlying asset |
Shariah compliant assets |
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Rating |
‘AA-IS’ by MARC Ratings |
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Shariah advisor(s) |
AmInvestment Bank backed by AmBank Islamic Bank’s Shariah committee |
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Tradability |
Yes |