Khazanah Nasional concludes benchmark US$483.9 million convertible Sukuk issuance - IFN

Khazanah Nasional concludes benchmark US$483.9 million convertible Sukuk issuance

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MALAYSIA: The investment arm of the Malaysian government, Khazanah Nasional (Khazanah), has successfully completed its SG$600 million (US$483.9 million) convertible Sukuk issuance on the 18th October. According to the deal, the certificates are exchangeable into ordinary shares of IHH Healthcare (IHH), one of the world’s largest private healthcare providers. Managing director of Khazanah, Azman Hj Mokhtar said: “This transaction has been executed at a very competitive price against the uncertain market backdrop, setting a benchmark for Sukuk issuances with an order book that covered 5.5 times of the initial issue size. This proves the market’s strong faith and confidence in the quality of the Sukuk, the underlying equity story of IHH and Khazanah’s credit.” The Singapore-dollar denominated deal was auctioned at a commendable price guidance of -0.25% yield to its maturity date and a 17% exchange premium. The positive reception by investors led the transaction to be increased from an initial SG$500 million (US$403.25 million) to SG$600 million (US$483.9 million). As the first Sukuk to offer exposure to the healthcare industry, the securities carry a tenor of five years, along with an investor put option exercisable at the end of the third year. Upon implementation of the exchange rights, Sukukholders will initially be entitled to receive an aggregate of 311.4 million ordinary shares of IHH, which represent approximately 3.8% of IHH’s current issued and paid up share capital. The issuance is said to be in line with Khazanah’s fund-raising strategies and its long-term commitment towards progressive divestment of its investments. Listed on the Singapore Exchange, Labuan International Financial Exchange and Bursa Malaysia, the Sukuk also afford a natural currency hedge for Khazanah towards its Singapore-related investments. The transaction was carried out through an SPV, Indah Capital, incorporated in Labuan, Malaysia’s offshore financial center. CIMB Bank, Deutsche Bank and Standard Chartered Bank are the joint bookrunners and lead managers for the issuance.