China-owned water treatment company, BEWG (M) Sdn Bhd (“BEWGM”) made its debut in the Malaysian Sukuk market by successfully issuing RM400 million Islamic Medium Term Notes (“Sukuk Wakalah”) on 19 July 2017 – the first-ever Ringgit denominated Sukuk by a Chinese conglomerate.
The Sukuk Wakalah was fully subscribed at the point of launch which allowed BEWGM to achieve its target funding size and meet its financing objectives. The Sukuk Wakalah carries a rating of AAIS (stable) by Malaysian Rating Corporation Berhad.
Proceeds from the Sukuk Wakalah issuance will be used to partly finance the refurbishment and upgrading of the water treatment plant in Bukit Sah, Kemaman, where BEWGM has been awarded the role of Design & Build Contractor by the Terengganu State Government namely “Kerja-Kerja Membaikpulih Dan Menaiktaraf Loji Rawatan Air Bukit Sah, Pembinaan Muka Sauk, Sistem Paip & Tangki Air Serta Kerja Penyaluran Air Dari Loji Rawatan Air Petronas Ke Sistem Agihan Kemaman & Lain-Lain Kerja Berkaitan Di Daerah Kemaman, Terengganu Darul Iman”
Commenting on the Sukuk Wakalah issuance, Datuk Vence Ong Kian Min, Chief Executive Officer of BEWGM said “This landmark transaction represents a number of “firsts” for BEWGM and the Malaysian Sukuk market. This is BEWGM’s first-ever debt capital market instrument, the first Ringgit denominated Sukuk by a China-owned company for water infrastructure funding, and the largest Ringgit denominated Sukuk issuance by a China-owned company to-date. The issuance has also enabled the Beijing Enterprises group to diversify its funding sources in Malaysia, which had so far been limited to bank loans.”
“This water treatment project is not only important for the state of Terengganu and its people, but it also represents strong relations between China and Malaysia, in particular with the Terengganu State Government. The refurbished and upgraded water treatment plant will ensure reliable water supply to the Kemaman district which houses Peninsular Malaysia’s oil and gas production and refinery operations, and accounts for about 22% of the state’s 1.2 million population.
This project is poised to meet the growing demand from industrial areas in Teluk Kalong and Kerteh which, in turn, will help promote the state’s long-term economic growth” said Datuk Vence Ong Kian Min.
CIMB Investment Bank Berhadand Maybank Investment Bank Berhad are the Joint Principal Advisers, Joint Lead Arrangers and Joint Lead Managers for the Sukuk Wakalah, while Affin Hwang Investment Bank Berhad, Industrial and Commercial Bank of China (Malaysia) Berhad and RHB Investment Bank Berhad are the Joint Lead Managers.
The issuance is an important milestone for BEWGM in enhancing its profile and increasing its recognition among local investors, paving the way for future fundraising exercises in Malaysia. Further, the issuance also serves to expand the diversification opportunities for investors in the local debt capital markets. The oversubscription of the Sukuk Wakalah is a testament to the receptiveness of the local market in welcoming foreign issuers.
“CIMB is pleased to have played a key role in fulfilling BEWGM’s largest Ringgit project financing requirements in Malaysia to date. The oversubscription of the Sukuk Wakalah signifies a strong investor interest in BEWGM’s maiden Ringgit Sukuk issuance, given its global brand recognition and sound track record in the water treatment industry. The success of this deal also reinforces CIMB’s long standing leadership position in arranging Ringgit Sukuk issuances, and is a testament to our deep investment banking expertise in Malaysia and ASEAN” said Datuk’ Kong Sooi Lin, Chief Executive Officer of CIMB IB.
Commenting on the successful issuance of the Sukuk Wakalah, Dato’ John Chong, Chief Executive Officer of Maybank IB, said “We are honoured that Maybank was able to play a holistic role, providing a complete end-to-end solution to BEWGM’s inaugural sukuk issuance. The strong debut not only reflects BEWG’s leadership in the global water treatment industry but also bears testimony to the strength, maturity and sophistication of Malaysia’s capital market. As the leading investment bank in Malaysia and ASEAN, Maybank IB will continue to leverage its deep local knowledge and strong regional links to bring global players such as BEWG to further deepen and broaden Malaysia’s debt market.”