Solarvest Holdings to issue inaugural SRI Sukuk in Q3 this year

Solarvest Holdings (Solarvest) will issue its maiden Sukuk under its newly established RM1 billion (US$214.02 million) sustainability Sukuk program in Q3 this year, Davis Chong, the executive director and group CEO of the clean energy solutions provider, told ISFI.

“In terms of financing, pursuing sustainability Sukuk offers Solarvest the potential to secure a lower interest [financing] rate,” Davis commented.

Solarvest lodged its Islamic medium-term note and Islamic commercial paper programs with Securities Commission Malaysia on the 28th June 2023 with RHB investment Bank as the principal advisor for the programs. The proposed programs represent the company’s first Sukuk or conventional bond effort.

According to Davis, by issuing Sukuk, the company will be able to access a broader investor base, including both conventional and Islamic investors. It will also have the potential to attract a larger and more diverse pool of investors, including SRI funds that prioritize ESG criteria.

While the programs have a combined limit of up to RM1 billion, they received first-time ratings of ‘A1’/Stable/P1’ from RAM Ratings premised on an initial issuance of RM100 million (US$21.4 million).

“We envisage Solarvest to undertake RM141.4 million (US$30.26 million) to RM165.8 million (US$35.48 million) [in] additional borrowings per annum in the next four years,” the rating agency noted.

With tenors ranging from seven to 30 years, the programs will provide Solarvest with long-term financing options.

These longer-term financing options are well-suited to Solarvest’s project nature, particularly its power purchase agreements for utility scale projects and commercial and industrial projects, which typically range from 15 to 25 years, Davis explained.

Proceeds from the programs will be allocated toward capital expenditure, working capital and the acquisition of projects, investments and assets. The majority of the Sukuk proceeds will be channeled toward financing the development and investment of renewable energy assets.

According to the group CEO, the projects financed by the Sukuk will contribute to the provision of clean energy, leading to carbon emission reduction and fostering sustainability and affordability in the energy sector.

In addition to renewable energy, Solarvest’s sustainability Sukuk framework includes energy efficiency, climate change adaptation and affordable basic infrastructure as eligible categories for the use of its Sukuk proceeds.

According to MARC Ratings, which assigned Solarvest’s Sustainability Sukuk Framework a ‘Gold’ impact assessment, the eligible categories are aligned to UN SDGs 7, 8, 11 and 12.

Solarvest has been a listed company on Bursa Malaysia since 2019. The stock was transferred to the Main Market from the ACE Market in 2021. Notably, the clean energy solutions provider’s stock is classified as Shariah compliant on the exchange.

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