Kuala Lumpur – Ekovest Berhad’s wholly owned subsidiary, Lebuhraya DUKE Fasa 3 Sdn Bhd, has been awarded the "Islamic Issuance of the Year" at the IFR Asia Awards 2016 for its RM3.64 Billion Sukuk Wakalah Issuance.

The Award was presented at the 2016 IFR Asia Awards Dinner, held on Tuesday, February 21 2017, at the Four Seasons Hotel, Hong Kong. The event, vastly regarded as the most prestigious in the region’s capital markets, saw 300 of Asia’s most senior and successful capital markets professionals gather, to celebrate the excellence of the industry.

The RM3.64 Billion (US$818m) project financing that featured a new shariah-compliant structure, set a record for the largest Malaysian ringgit bond for a greenfield toll-road project.

Lebuhraya DUKE Fasa 3 Sdn Bhd, as the Issuer, raised the funds in August to help fund the construction of the Setiawangsa-Pantai Expressway (formerly known as the DUKE Phase 3), a 32.1km elevated expressway that will complete a critical ring road around Kuala Lumpur.

Ekovest Berhad Managing Director, Datuk Seri Lim Keng Cheng commented “We are very proud, to be recognized for our all hard work in securing the project financing for this infrastructure project that will help ease congestion and ensure quicker travel times for the citizens of Kuala Lumpur.  Now, we can turn our focus to the construction of the Setiawangsa-Pantai Expressway.”

AmInvestment Bank, acting as the financial and principal adviser, proposed a Wakalah Bi al-Istithmar structure, combining the Wakalah, Murabahah and Tawarruq principles in an asset-light format.

The Sukuk Wakalah concept addressed DUKE 3’s lack of tangible assets and allowed the Issuer to come to the bond market at the greenfield stage. Most sukuk structures require physical underlying assets.

The format was well accepted in the International Islamic markets.  Nevertheless, it is the first time the structure has been used for a greenfield toll road project in Malaysia.

Under the Wakalah Bi al-Istithmar structure, the sukuk holders will use an investment wakeel or agent, such as a financial institution, to invest the proceeds in a combination of assets and debt.

The assets comprise of the Duke 3’s 53-year operating concession and its construction activities. The debt component is a commodity Murabahah investment on a cost-plus format while the Tawarruq, a tripartite sale format, provides the platform.

The issuer ruled out using just the commodity Murabahah concept for the entire structure as this involved additional costs such as third-party brokerage fees.

Malaysian investors embraced the new structure and local rating agency MARC assigned a AA– rating, and Duke 3 printed 14 tranches on August 23, with tenors of 10 to 23 years and coupons ranging from 5.14% to 6.43%.

The completion of the deal was more remarkable when seen against the chequered history of toll road project bonds in the ringgit market, where a number had to be restructured. But Duke 3’s urban highway location in the heavily populated Klang Valley is expected to capture strong traffic flows.

The debt, made up 83% of the RM5.05 Billion total project cost. It was also supported by a RM560 Million interest-free reimbursable interest assistance loan from the Federal Government of Malaysia, the first facility of its kind for a greenfield project.

Ekovest’s M$850m equity injection made up the balance. AmInvestment Bank was lead arranger and joint lead manager and bookrunner with CIMB, Maybank and RHB.