KUALA LUMPUR: Exsim Development Group (EDG) has successfully established its first landmark RM3.0 billion financial programme comprising RM2.0 billion Sukuk Musharakah IMTN Programme (IMTN Programme) and a RM1.0 billion Sukuk Murabahah ICP Programme (ICP Programme) through a special purpose financial vehicle, Exsim Capital Resources Bhd (ECRB).
On January 30, EDG issued a real estate unbilled sales-backed Sukuk facility, which is the first structured transaction in Malaysia to monetise progress billings involving multiple development projects, allowing the company to more efficiently manage its project development cash flows.
ECRB floated the first tranche of its RM2.0 billion 10-year IMTN Programme which will monetise unbilled sales for executed property transactions.
Under this programme, EDG and its group of companies will sell their beneficial interest under the respective development projects.
The future progress billings with regard to the relevant development projects will be used to fund the remaining construction costs as well as to meet the Issuer’s fees, expenses and obligations under each facility.
Despite being a privately-owned property developer, EDG's offering won an investment grade rating of ‘AA3/Stable’ from RAM Ratings Services Bhd and Danajamin Nasional Bhd (DNB) has also agreed to guarantee the liquidity support for the Tranche 1 Sukuk Musharakah.
For this first tranche issuance, the projects to be securitised under this financing programme are the Nidoz Residences and D’Nuri Residences projects located in Desa Petaling, Kuala Lumpur.
Both projects has obtained AA3/Stable rating by RAM Rating.
The RM290 million Tranche 1 IMTN is secured against 1,862 sales and purchase agreements(SPA) for its Nidoz Residences and D’Nuri Residences projects in Desa Petaling, Kuala Lumpur whilst the unrated Tranche 1 ICP of up to RM130 million, which is meant to underwrite construction of Nidoz Residences and D’Nuri Residences developments and liquidity risk of Tranche 1 is guaranteed by DNB and fully underwritten by United Overseas Bank (Malaysia) Bhd.
The Tranche 1 IMTN was fully subscribed notwithstanding Exsim is a privately held property
developer and a first time issuer in the Malaysian Sukuk capital markets.
“RAM Ratings had applied a rigorous and extensive credit rating process to the Nidoz Residences and D’Nuri Residences projects to ensure institutional investors’ credit interest is mitigated and protected at all times.
"The credit rating accorded to the Tranche 1 IMTN is a reflection of EDG’s efficient management execution, strong performance capability, a high percentage of lock-in sales backed by end financing and historical track record of completing projects on time and well within budget,” Exsim Development Sdn Bhd managing director Lim Aik Hoe said in a statement.
The Sukuk structure is developed, arranged and advised by NewParadigm Capital Markets Sdn Bhd (NCM), a corporate finance advisory firm licensed by the Securities Commission Malaysia.
“This Sukuk is also the world’s first ever Shariah compliant structured transaction to monetise
progress billings involving multiple projects. Therefore, it is a landmark in the Malaysian and global Sukuk market,” NCM managing director Charanjeev Singh said.
“NCM is at the forefront of innovation in the Malaysian capital markets particularly in Islamic financing having structured landmark Sukuk transactions. This
issuance demonstrates our continued commitment to persistently raise the bar in advancing the Malaysian capital markets and to promote Malaysia as an Islamic finance hub,” NCM executive director Danny Kwan.