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Monday, April 15, 2024

Launch Partners

South African agricultural sustainability Sukuk Agrarius to list on JSE imminently 

The inaugural ZAR500 million (US$28.84 million) Sukuk facility to be issued by agriculture-focused investment company Agrarius has received a conditional approval to list on the Johannesburg Stock Exchange (JSE), ISFI has learned. The imminent listing of the inaugural issuance, with an indicative tenor of 36–48 months, is under a sustainability-linked ZAR10 billion (US$576.82 million) Sukuk program, with proceeds being channeled toward investing across the agricultural value chain. 

“A lot of people want to invest in agriculture, but there are no opportunities to access that particular segment of the market because either there are no, or there are limited, instruments to invest in that segment of the market,” Fatima Vawda, the managing director of 27four, which is the administrator of Agrarius, told ISFI. 

According to Fatima, Agrarius will be the first Sukuk to list on the JSE.  

27four is a South Africa-based investment manager offering both Islamic and conventional products. As the administrator, 27four will identify the projects and specific transactions which the Sukuk proceeds will finance. The inaugural issuance will finance between five to 10 projects.  

A degree of flexibility is structured into the offering, known as Sukuk Agrarius. The Sukuk issuance is based on a Wakalah structure which allows it to apply an array of Islamic contracts when financing projects including Musharakah, Mudarabah, Murabahah, Ijarah, Salam and Istisnah. Moreover, the ZAR10 billion program allows for the issuance of both sustainability-linked Sukuk as well as vanilla sustainability Sukuk without linked key performance indicators (KPIs). 

Each issuance under the program will see Agrarius prepare the applicable pricing supplement containing the terms and detailing the KPIs for the use of the proceeds, which will be signed off by its independent sustainability agents.  

27four is optimistic about its first listed Sukuk project.  

“We think that the appetite is clearly there. We are hoping to be oversubscribed when we list and we think we will be, given the amount of queries we have received,” Fatima added. 

If the Sukuk issuance is indeed oversubscribed, Agrarius may issue a second Sukuk shortly after the listing to capitalize on the demand, shared Fatima. 

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