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SHUAA Capital Arranges US$50m ‘First-of-its-Kind’ Structured Sukuk for ESG Technology-enabled Agribusiness PHSF

Dubai – UAE-based asset management company, SHUAA Capital, arranged a US$50 million Structured Sukuk on 15 March 2021 for Pure Harvest Smart Farms (PHSF), the sustainable technology-enabled agribusiness based in the UAE.

SHUAA Capital also co-invested in Pure Harvest through its managed funds as part of this funding round. The transaction, according to SHUAA Capital, is a first-of-its-kind financing solution for PHSF and reflected the asset manager’s increasing focus on technology investments, including in Agriculture Technology (AgTech), as well as its continued innovation in alternative financing solutions.

SHUAA Capital was mandated to originate, structure and place this latest financing solution for PHSF, which comprises a US$50 million 3-year Sukuk with embedded warrants. Simultaneously, Pure Harvest has also raised US$10 million in growth equity. “This is the first time in the region that an early-stage business has been able to secure venture debt funding from the capital markets especially for ESG (Green) Financing. This investment round attracted cornerstone investments from Franklin Templeton and Sancta Capital amongst others.”

Jassim Alseddiqi, Group Chief Executive Officer of SHUAA Capital, stressed that he sees “exciting potential in the technology space and this is a great example of how we are executing on our stated strategy to focus on this area, this time supporting a market leader in AgTech as it seeks to accelerate its growth.”

Natasha Hannoun, who led the transaction for SHUAA, added “We witnessed Pure Harvest Smart Farms’ leadership in AgTech, the strength of the team, and its proven ability to execute, giving us the confidence that Pure Harvest Smart has significant growth potential as it seeks to address the need for food security within the Gulf and wider region”.

According to Natasha Hannoun, this funding will help PHSF to scale into a major regional player in controlled-environment agriculture to leverage its significant growth potential as it seeks to address the need for food security, sustainability and economic diversification within the Gulf and wider region.

Pure Harvest, headquartered in Abu Dhabi, is soon to complete its second high-tech hybrid greenhouse growing system within the UAE. It is currently constructing its beachhead in Saudi Arabia and has also announced a further EUR39 million expansion project in Kuwait. Upon completion of its new projects the company will produce a variety of tomatoes, leafy greens, and berries, with plans to continue to diversify its offering in the future.

 

Indonesian Government Raises IDR24 Trillion Through Four Rupiah-denominated Sukuk Auctions in March as Aggregate Funds Raised in Q1 2021 Totals IDR68 Trillion

Jakarta – The Government of Indonesia continues to consolidate its role as one of the most proactive repeat issuers of sovereign domestic Sukuk in the market through four auctions during the month of March 2021.

The Department of Islamic Financing at the Directorate General of Budget Financing and Risk Management, Ministry of Finance of Indonesia, in fact raised a total IDR24 trillion (US$ 1.65 billion) in March. This contrasts too IDR12 trillion raised in February and the IDR32 trillion raised in January. As such, the totalled raised for the First Quarter 2021 amounts to IDR68 trillion.

The Government of Indonesia is a prolific issuer of domestic Sukuk and demand from local institutional investors is robust. The total bids for the March offerings amounted to IDR50.0981 trillion in line with the January aggregate bids exceeding IDR60.72 trillion in January and the IDR26.11 trillion in February 2021.

The March 2021 issuances comprised four auctions of Sovereign Shariah Securities (SSS) or Sukuk Negara through the auction system of Bank of Indonesia. The auction held on 9 March 2021 raised IDR4.495 trillion comprising six tranches with tenors of 6 months, 2 years, 4.5 years, 13 years, 16 years and 25 years. The tranches were priced at a coupon rate at discount, 6.5%, 6.125%, 6.375%, 6.1% and 7.75% respectively.

The auction held on 10 March 2021 raised IDR7.505 trillion comprising five tranches with tenors of 2 years, 4.5 years, 13 years, 16 years and 25 years. The tranches were priced at a coupon rate of 6.5%, 6.125%, 6.375%, 6.1% and 7.75% respectively.

The auction held on 23 March 2021 raised IDR6.396 trillion comprising six tranches with tenors of 6 months, 2 years, 4.5 years, 13 years, 16 years and 25 years. The tranches were priced at a coupon rate at discount, 6.5%, 6.125%, 6.375%, 6.1% and 7.75% respectively. The auction held on 24 March 2021 raised IDR5.604 trillion comprising four tranches with tenors of 2 years, 4.5 years, 13 years, 16 years and 25 years. The tranches were priced at a coupon rate of 6.5%, 6.375%, 6.1% and 7.75% respectively.

Nigerian DMO Lists Third Sovereign Sukuk of ₦162.557bn on Nigerian Stock Exchange and FMDQ Securities Exchange to Unlock Liquidity for Investors and the Economy

Lagos – The Debt Management Office (DMO) of the Nigerian Ministry of Finance listed its third Sovereign Sukuk Al-Ijara of ₦162.557 billion (US$426.7 million) for secondary trading on the Nigerian Stock Exchange and the FMDQ Securities Exchange on 19 March 2021.

The Sukuk, which has a 7-year tenor and priced at a rental rate of 11.200% per annum, matures in December 2027, was issued in 2020. The offering which at the time of issuance was massively subscribed to the tune of ₦669.124 billion or 446%, was issued to finance 44 arterial economic road projects across the six geopolitical zones of the country.

“With the listing, investors who are already holding the Sukuk can trade them while new investors have an opportunity to buy the Sukuk in the secondary market,” said Patience Oniha, Director General of the DMO, at the bell ringing ceremony.

The DMO started the issuance of Sovereign Sukuk in September 2017 as one of the measures towards attaining its strategic objective of bridging the infrastructure gap in Nigeria to promote job creation and economic growth.

Following the successful issuance of the ₦100 billion debut Sukuk in 2017, the DMO issued another ₦100 billion Sukuk in 2018. The proceeds of the two Sukuk were deployed to the rehabilitation and first reconstruction of road projects across Nigeria.

To date, the DMO has raised a total sum of ₦362.57 billion in less than three years for the rehabilitation and construction of major economic roads across the country. “In addition, by issuing Sovereign Sukuk, the product range available to investors in the domestic financial market has increased, while several retail investors have been attracted to the financial markets. The DMO remains committed to providing funding for the Government, as approved from time to time, to finance the country’s development,” added Oniha.

IILM Continues Consecutive Monthly Short-Term Sukuk Issuance with US$1.4bn Three-Tranche Offering in March as First Quarter 2021 Aggregate Tops US$3.9bn

Kuala Lumpur – The International Islamic Liquidity Management Corporation (IILM) continued its short-term Sukuk issuance calendar with its third monthly auction in March 2021. The auction raised US$1.4 billion through the issuance of short-term Sukuk across three different tenors.

The transaction comes under IILM’s US$4.0 billion short-term issuance programme. The Corporation held an auction on 16 March 2021 for the three series of issuances, priced by the market as follows:

  • US$400 million of 1-month tenor certificates at 0.35%
  • US$500 million of 3-month tenor certificates at 0.33%
  • US$500 million of 6-month tenor certificates at 0.40%

This follows the three-tranche issuance of short-term securities in February 2021 totalling US$1.35 billion. This brings the total Sukuk issued by the IILM in the first three months of 2021 to US$3.9 billion.

According to IILM, the March issuance is the Corporation’s single highest issuance size since inception in 2010. “Today’s auction marks yet another landmark for the IILM as the highest ever issuance amount since inception. We are pleased that support from the IILM’s network of Primary Dealers and investor base continues to demonstrate robust demand at the short-end despite uncertain global economic recovery.” said Dr Umar Oseni, Chief Executive Officer of IILM.

The competitive tender resulted in significant interest from GCC and Asia-based Primary Dealers as well as other jurisdictions, with a strong final orderbook in excess of US$2.1 billion, representing an average oversubscription rate of 1.5 times.

The IILM is a regular issuer of short-term Sukuk across varying tenors and amounts to cater to the liquidity needs of institutions offering Islamic financial services. “Based on our indicative issuance calendar, the IILM envisages issuing in excess of USD1.0 billion short-term Sukuk for nearly every month in 2021. As we look towards 2021 with headwinds including uneven economic recovery, renewed lockdowns and rising debt burdens from government policy responses, we stand ready to collaborate with our shareholders, Primary Dealers, investors and industry partners towards fostering a resilient and sound Islamic liquidity management ecosystem.” added Dr Umar.

The IILM’s short-term Sukuk programme is rated “A-1” by S&P with current outstanding issuance size amounting to US$3.51 billion.

According to the IILM, the primary dealers that participated in the auction conducted under the competitive bidding of the Bloomberg AUPD Platform included Abu Dhabi Islamic Bank; Al Baraka Turk Participation Bank; Barwa Bank; Boubyan Bank; CIMB Islamic Bank Berhad; First Abu Dhabi Bank; Kuwait Finance House; Macquarie Bank; Maybank Islamic Berhad; Qatar Islamic Bank; and Standard Chartered Bank.

NOGA Holding Upsizes Offering to Benchmark US$600m Sukuk Following Robust Investor Demand and Tighter Pricing

Manama – Bahrain’s National Oil and Gas Holding Company (NOGA Holding), which is wholly owned by the Bahraini Government, successfully priced a US$600 million Senior Unsecured Sukuk at end March 2021.

The Sukuk was issued by nogaholding Sukuk Limited, a special purpose vehicle owned by the Obligor, NOGA, and incorporated in the Cayman Islands, under its US$3 billion Trust Certificate Issuance Programme. Fitch Ratings assigned an expected ‘B+’ Long-Term Issuer Default Rating (IDR) and senior unsecured rating with a stable outlook to the certificates on 29 March in line with the similar rating to the Trust Certificate Programme. Late last year Fitch affirmed the ‘B+’ IDR of the parent, NOGA Holding.

The company mandated a consortium of banks including Gulf International Bank, HSBC, BNP Paribas and JPMorgan as Lead Arrangers and Bookrunners to the transaction on 22 March and to arrange investor calls in the UK, GCC, MENA region, Asia and offshore US accounts for an issuance of US dollar-denominated Islamic Trust certificates (Sukuk).

The offering was launched on 31 March at an initial price guidance of 5.75%-5.875% for the Sukuk. The company initially aimed at issuing a benchmark US$500 million Sukuk, but the offering was upsized to US$600 million due to robust demand for the certificates from a wide range of international investors.

The strong demand with the order book reaching more than US$2.9 billion and the upsizing of the issuance tightened the pricing by 50-62.5 basis points to the initial guidance. This according to bankers “is unheard of in current markets.”

The structure is a hybrid Sukuk Wakala/Ijara/Murabaha. In its rating rationale, Fitch observed that the “rental due on a rental payment date shall be an amount equal to the periodic distribution amount payable under the relevant certificates in respect of the corresponding periodic distribution period less instalments of the Murabaha profit payable with respect to such periodic distribution period. Such rental shall be sufficient to fund the periodic distribution amounts payable by the trustee in respect of the relevant certificates.”

The structure has a defined obligation on nogaholding “to ensure that at all times, the tangibility ratio (total value of the lease assets-to-aggregate value of the lease assets and the deferred sale price outstanding) is more than 50%.” Fitch expects “extraordinary support from the government of Bahrain” in case of nogaholding having “no sufficient headroom in terms of the tangibility event, since its IDR is equalised with that of the sovereign.”

The transaction is partly governed by English law and partly by Bahraini law. The proceeds from the Sukuk issuance will be used to support the company’s balance sheet and for general corporate purposes.

Al Rajhi Bank Signs SAR863m Murabaha Financing Facility with Yamama Cement Company in March 2021

Jeddah – Yamama Cement Company in Saudi Arabia signed a SAR863 million Sharia’a compliant financing facility with Al Rajhi Bank on 25 March 2021.

In a disclosure to the Saudi Stock Exchange (Tadawul) Yamama Cement confirmed that the facility comprised two tranches – a long term (5 year) financing facility totalling SAR563 million and a short-term revolving facility of SAR300 million with a 1-year tenor but renewable on demand. 

The proceeds from the facilities will be used to refinance some of Yamama Cement’s existing debt and for working capital requirements.

The facility is guaranteed by a promissory note from the company to the value of the financing agreement.

MUFG Malaysia Raises RM250m in Latest Sukuk Issuance under its Multi-currency US$500m Sukuk Wakalah Issuance Programme

Kuala Lumpur – MUFG Bank (Malaysia) Berhad (MUFG), the Malaysian subsidiary of Japan’s Mitsubishi UFJ Financial Group, successfully issued a RM250 million (US$ 60.6 million) Sukuk Wakalah on 25 March 2021.

The Malaysian ringgit-denominated Sukuk was the third issuance issued under the company’s 10-year US$500 million, Sukuk Programme under the Shariah principle of Wakalah Bi Al-Istithmar.

The two-year issuance marks the first Ringgit-denominated Sukuk for a Japanese bank issued out of Malaysia and complements MUFG’s earlier yen-denominated and US dollar Sukuk offerings under the Programme which was launched in 2014.

The Sukuk was successfully placed with selected institutional investors comprising pension funds and bank-backed asset management companies. Because of strong demand, MUFG upsized the issuance to RM250 million from the initial target of RM200 million.

MUFG has steadily been increasing its Islamic finance footprint in Malaysia and the region, especially in corporate financing ESG business and has pioneered sustainability-linked Islamic financing facilities in support of major Malaysian institutional clients. 

MUFG Bank (Malaysia) CEO/President, Fumio Takamatsu, emphasised that the company is “committed to further expand our presence in the Islamic finance sector in Malaysia, and this issuance is the latest demonstration of our commitment to promote the growth of Islamic finance within the country as well as across global Islamic capital markets in particular.”

The Maldives is the Latest Debutante in the Islamic Sovereign Debt Market with a US$200m Hybrid Sukuk Al Ijara/Murabaha Offering

Male – Another sign that the sovereign Sukuk issuance universe is increasing is the fact that the Ministry of Finance of Maldives is the latest to successfully issue a maiden hybrid US$200 million Sukuk Al Ijara/Murabaha.

The issuance was issued through Maldives Sukuk Issuance Limited (MSIL), a special purpose vehicle owned by the Ministry of Finance on behalf of the Government of The Republic of Maldives, on 26 March 2021.   

The Sukuk has a tenor of 5 years and was priced at a profit rate of 9.875% per annum paid semi-annually. The senior unsecured Sukuk certificates were issued under the recently established US$1 billion Trust Certificate Issuance Programme established by MSIL.

The proceeds from the issuance will go towards the settlement of tender offers for the Government’s 2022 Treasury bonds. The issuance is part of the Government’s efforts to diversify its sources of public debt finances.

The Islamic Corporation for the Development of the Private Sector (ICD), the private sector arm of the Islamic Development Bank (IsDB) Group; Emirates NBD Capital, HSBC and Credit Suisse acted as the joint lead managers and joint bookrunners for the issuance.

The Sukuk will be listed on Nasdaq Dubai and Euronext Dublin.  

SAMA’s Latest Licenses Brings Total Number of Payment Solutions Companies in the Kingdom to Thirteen

Riyadh – The Saudi Central Bank (SAMA) licensed two new payments solution companies in March 2021 as part of its Fintech and financial digitisation promotion strategy for the industry. In this latest round, International Digital Solutions Company is licensed to provide electronic wallet service (electronic transfer and payment service), and Azm Fintech Company to provide payment services through the SADAD Bill Aggregation Services.

According to SAMA, this brings the total number of payments solutions companies licensed by SAMA to 13, in addition to two payments solutions companies obtaining initial approval.

“This step,” explained the central bank, “comes from SAMA’s supportive role to empower the financial technology sector by allowing the entry of new activities to strengthen and support the sector, and to attract a new segment of investors and companies to work under its supervision, and in a manner that ensures the efficiency of the work of these companies, by adhering to the regulatory and supervisory requirements related to corporate governance, risk and compliance management, and customer protection, in line with the role of SAMA in enhancing financial stability, and supporting opportunities for growth and economic development in the country towards achieving the goals of the Kingdom’s Vision 2030.”

The objective says SAMA is to support the payments companies and financial technology sector, raise the level of effectiveness and flexibility of financial transactions, in addition to enabling and encouraging innovation in the financial services provided, in order to achieve its goals to enhance the level of financial inclusion in the Kingdom, and to enable easy and safe access to financial services to all community layers.

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