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Wednesday, February 21, 2024

Launch Partners

Turkish beet cooperative Kayseri Seker to issue TRY100 million (US$5.25 million) Sukuk in May

Kayseri Seker, Turkiye’s largest beet growers cooperative brand, is set to raise TRY100 million (US$5.25 million) in May 2023 through Sukuk Wakalah issued via Halk Varlik Kiralama, Halk Investment’s SPV, Dr Menevse Ozdemir Diliduzgun, the head of corporate finance and advisory at Halk Investment, told ISFI.

While the term of the Sukuk offering is yet to be confirmed, it is notable that agricultural Sukuk are generally short-term to match the agricultural production cycle, with Kayseri Seker’s previous Sukuk carrying a tenor of 84 days.

The upcoming issuance is the 12th round of Sukuk funding to be raised by the cooperative for its agricultural operations. The 11 prior Sukuk facilities were predominantly subscribed by institutional investors such as mutual funds and pension funds.

Kayseri Seker won IFN’s 2022 Most Innovative Deal of the Year award for its unique structure using crystal sugar as the underlying asset for the Sukuk.

“In Kayseri Seker’s Sukuk structure, there is a combination of Wakalah, Ijarah and Murabahah Sukuk. Besides an asset portfolio of a quota [of] crystal sugar, we designed moveable pledge and account pledge agreements in the system in order to make Kayseri Seker more flexible while using the asset portfolio in its daily operations,” Dr Menevse detailed.

The Murabahah element of the Sukuk structure occurs when Kayseri Seker sells the asset portfolio to third parties, using the fund as trade finance and creating an expected return.

The structure also features a guarantee agreement between the SPV and Kayseri Şeker. If Kayseri Şeker is unable to sell the underlying assets to third parties, the Sukuk’s dissolution amount will be paid from its own funds and cash flows.

We have seen a number of agricultural Sukuk coming out of Turkiye with players like Hasfin and Tarfin issuing rounds of short-term Sukuk to channel toward the agricultural sector in 2022.

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