Kuala Lumpur, 26 September 2024 – Johor Plantations Group Berhad (JPG) is pleased to announce that it has successfully issued its inaugural Sukuk Wakalah in aggregate of RM1.35 billion in nominal value (Sukuk Issuance) from its Sukuk Wakalah Programmes. This milestone represents a significant step in JPG’s commitment to enhancing financial flexibility and operational efficiency within the Group.
With this Sukuk issuance, JPG will see a significant reduction in its annual interest expenses. The blended profit rate for the RM1.3 billion IMTN (Islamic Medium-Term Notes) issuance is set at 4.08%, compared to an average of 5.12% on existing facilities. This translates to an approximate saving of RM12.8 million annually, improving the group’s cash flow and enhancing profitability.
Upon repayment of the Islamic Syndicated Term Financing (STF-i) of RM1.5 billion and the Islamic Term Financing (TF-i) of RM500 million, collateral valued at RM2.4 billion will be released. This strategic decision will not only bolster JPG’s balance sheet but also increase flexibility in asset management.
Additionally, by consolidating multiple loans into a single Sukuk facility, JPG simplifies its debt management and reduces administrative costs. This streamlined structure is expected to enhance operational efficiency and further strengthen the Group’s financial position.
“We are thrilled by the overwhelming support from our investors, as evidenced by the issuance being oversubscribed by 3.27 times. This robust demand highlights widespread confidence in JPG’s long term growth prospects. The favourable rates achieved during this Sukuk issuance reflect our AA1 credit rating and underscore investor trust in JPG as a leader in sustainability, as well as our strong operational and management performance,” said JPG Managing Director, Mohd Faris Adli Shukery.
The proceeds from the Issuance will be used for Shariah-compliant purposes, including refinancing JPG’s existing and future Shariah-compliant borrowings, supporting working capital, investments and capital expenditure as well as covering fees and expenses related to establishing the Sukuk Wakalah Programmes.
Structured on the Shariah principle of Wakalah Bi Al-Istithmar, the issuance marks the world’s first Sustainability-Linked Sukuk in the plantation sector, and also the first rated Sukuk under the Sustainable and Responsible Investment (SRI) Linked Sukuk Guidelines by the Securities Commission in Malaysia.
The Sukuk features a one-way upward adjustment to its profit rates linked to JPG’s achievement of pre-determined sustainability performance targets. The targets include 50% carbon intensity reduction (Scope 1 and 2) against its 2012 baseline, 100% traceability to fresh fruit bunches (FFB) suppliers by 2025 and annual water consumption of 1.2 cubic meters per metric tonne FFB and below.
Maybank Investment Bank acted as the Sole Principal Adviser, Sole Sustainability Structuring Adviser, Joint Lead Arranger and Joint Lead Manager for the Sukuk Issuance.
As the Sole Sustainability Structuring Adviser, Maybank Investment Bank had set up JPG’s Sustainable Finance Framework, which adopts the principles and guidelines set by the International Capital Market Association (ICMA), ASEAN Capital Markets Forum, and the Securities Commission, among others. This is also the first integrated framework by a Malaysian issuer. MARC Ratings acted as the second-party opinion provider, which has assigned a Gold Impact Assessment to the JPG Sustainable Finance Framework, reinforcing JPG’s commitment to its sustainability goals.
Michael Oh-Lau, Chief Executive Officer, Maybank Investment Banking Group, said, “The strong market interest during the bookbuilding process reflects JPG’s solid financial position. Guided by Maybank’s pathway for the palm oil sector, we are committed to helping market players achieve net zero emissions. We strive to become the transition partner of choice in Malaysia and across the ASEAN region. Cumulatively from 2021 to mid-2024, Maybank Group has mobilised RM83.2 billion in sustainable finance, exceeding our 2025 target of RM80 billion.”
