Malakoff issues RM250 mil ASEAN Sustainability SRI Sukuk Murabahah

MALAKOFF Corporation Berhad (Malakoff), through its wholly-owned subsidiary, Malakoff Power Berhad (MPower), has issued its inaugural RM250 million ASEAN Sustainability SRI Sukuk Murabahah under its RM1.2 billion Islamic Medium-Term Notes Programme (IMTN).

This is Malakoff’s first sustainability offering under its ASEAN Sustainability SRI Sukuk Murabahah and the first by an independent power producer in Malaysia.

The proceeds from the Issuance shall be utilised to finance eligible projects by MPower, Malakoff and its subsidiaries, in accordance with Malakoff’s Sustainable Finance Framework, which has been in place since December 2023.

Maybank Investment Bank Berhad (Maybank IB) acted as the Sole Lead Manager and Facility Agent while Maybank Islamic Berhad was the Shariah Adviser for the Issuance.

Maybank IB was also the Sustainability Structuring Adviser for Malakoff’s Sustainable Finance Framework.

As part of its broader commitment to sustainability and energy transition, Malakoff has made strides over the past year in advancing its sustainability commitment. The group achieved a 3.7% year-on-year reduction in greenhouse gas emissions intensity moderately contributed as well by a 17.0% reduction in Scope 2 emissions with respect to its electricity consumption.

It also launched its flagship Biomass Co-firing Project at the 2,100 MW Tanjung Bin Power Plant for a trial run under the National Energy Transformation Roadmap.

Officiated by Deputy Prime Minister and Minister of Energy Transition and Water TransformationDatuk Seri Fadillah Yusof, the project achieved a 2% biomass co-firing ratio.

In a statement, Malakoff said it is committed to scale up the biomass co-firing to a higher ratio of 15% by 2027.

This milestone is projected to reduce carbon dioxide (CO2) emissions by approximately 755,000 tonnes annually, which is equivalent to the carbon offset of 142 million mature trees.

In parallel, Malakoff commenced construction of three run-of-river small hydropower plants along Sungai Galas in Kelantan, expected to offset a further 272,424 tonnes of CO2 per year.

The group also continued expanding its renewable energy (RE) portfolio, achieving 173 MW in total RE capacity — a 496.6% increase from its 2021 baseline. This includes 17.4 MWp of completed commercial and industrial solar installations and the acquisition of equity stakes in ZEC Solar Sdn Bhd (51%) and TJZ Suria Sdn Bhd (49%), contributing an additional 29 MW.

Malakoff MD and Group CEO Anwar Syahrin Abdul Ajib (picture; above) noted that this transaction marks a significant milestone for Malakoff Power, as it represents the group’s first ASEAN Sustainability SRI Sukuk Murabahah issuance via a book-building exercise under its IMTN Programme.

“Given that MPower’s last public Sukuk issuance was in December 2013, we are very encouraged by the strong demand from a diverse investor base for this issuance, which has set a new pricing benchmark for MPower.

“Looking ahead, Malakoff will continue to broaden its assets portfolio through strategic partnerships and circular economy initiatives. As a trusted partner in Malaysia’s green transition, we remain focused on strengthening capabilities, enhancing efficiencies and delivering long-term value in an evolving energy landscape,” he said in the statement.

On the back of growing demand for sustainability assets and the scarcity value of Sukuk offerings by MPower, the transaction was oversubscribed by 10.34 times.

Supported by the strong order book, the price guidance was revised and tightened multiple times. The Issuance was finally priced at MGS +70 basis points across both tenures of seven and 10 years, which is 30 basis points lower than the upper end of the initial price guidance.

Maybank Investment Bank Berhad CEO Michael Oh-Lau (picture) noted that the strong response from investors is testament of the market’s confidence in Malakoff as well as Maybank IB’s ability to secure strong participation despite market seasonality.

“The pricing outcome also positions this landmark transaction as one of the lowest spreads for a corporate within the AA-/AA3 rating band in recent times,” he said. — TMR