The $398.8 million raised by Khazanah Nasional via Labuan SPV is exchangeable into Khazanah’s holding of ordinary shares in Beijing Enterprises Water Group.
The issuance represents the first Sukuk to offer exposure into China’s growing water utility sector and is the highest exchange premium achieved for an exchangeable Sukuk by Khazanah.
The exchangeable Sukuk was priced through an accelerated book-building process and achieved a final pricing of 43.0% exchange premium with zero periodic payment and 0.00% yield to maturity.
The transaction achieved the highest exchange premium for a zero coupon and zero yield exchangeable Sukuk since 2007 in Asia Pacific ex-Japan. The Sukuk, which has a tenor of 5 years with an investor put option at the end of year 3, drew demand from a diverse group of investors comprising long only funds, hedge funds, arbitrage funds as well as asset managers across Asia and Europe.
The exchangeable Sukuk, structured based on the principle of Wakala, is a novel Islamic finance solution whereby it references a stock in the water utility sector that does not meet the financial ratio requirements for Shariah-compliance set by the Dow Jones Islamic Market™ Index and FTSE Shariah Global Equity Index Series.
The structure also provides the Sukuk holder the option to request for Khazanah to settle the exchange right by delivering BEWG shares in lieu of cash, subject to the terms and conditions of the Sukuk.
Bank of America Merrill Lynch, CIMB and Deutsche Bank are the Joint Bookrunners and Joint Lead Managers for this exchangeable Sukuk transaction.
Full details of the sukuk can be found in the Sukuk.com Sukuk Profiles section here.
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