PLUS Malaysia Berhad

PLUS MALAYSIA BERHAD
17 MAY 2016
SUKUK FOR INFRASTRUCTURE – MALAYSIA EXPERIENCE
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G ro u p o f
Companies
Khazanah
Nasional
Berhad is the Malaysian
Government’s
investment fund. It has
investments in over 50
major companies
in
Malaysia and abroad.
EXPRESSWAYS
100%
100%
TOWNSHIP &
PROPERTY
DEVELOPMENT
66%
ENGINEERING &
CONSTRUCTION
ASSET & FACILITY
MANAGEMENT
100%
70%
PLUS Expressways International Berhad
100%
51%
100%
PROPEL
PLUS Malaysia Berhad
100%
61%
Companies / shareholding as at 31
December 2014
Listed on Bursa/NZX
Internati
onal
Consulta
2nts
CORPORATE STRUCTURE OF PLUS
49%
Ministry of Finance
(1 Special Rights
Redeemable
Preferences Share)
51%
PLUS Malaysia Berhad
100%
Projek Lebuhraya
Usahasama Berhad
Lebuhraya Pantai
Timur 2
100%
Teras
Teknologi
100%
PLUS
Helicopter
Services
20%
Touch ‘n
Go
5 Highway Concessions
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LARGEST TOLL EXPRESSWAY OPERATOR IN SOUTH EAST ASIA
& ONE OF THE RENOWNED TOLL ROAD PLAYER GLOBALLY
BKE
LPT2
Northern region
(6 sections)
PB
ƒ PLUS started toll road operation in 1988 with more
than 20 years of experience
ƒ Backbone of Malaysian road transport system:
™ Connects major industrial, commercial &
transportation centres
™ Links major seaports and airports
ƒ States serviced by the NSE make up 81% of
population and 89% of GDP in Peninsular Malaysia
PLUS
Highways under PLUS
Central region
(6 sections)
ELITE
KL
International
Airport
Southern region
(5 sections)
LINKEDUA
LENGTH
PLUS
North-South Expressway
846 km
ELITE
NSE Central Link
63 km
LINKEDUA
Malaysia-Singapore Second
Crossing
47 km
BKE
Butterworth-Kulim Expressway
17 km
PB
Penang Bridge
13.5 km
LPT 2
Lebuhraya Pantai Timur 2
184 km
Total
1,170.5 km
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PLUS’ Financing Map
2006 &
onwards
2002-2005
1999-2001
1988-1998
1988
Conventional Loans
(Term Loan,
Government support
loan)
Highway
Concession
awarded by the
Government
Refinancing via issuance
of Islamic Bonds - BAIDs
(in accordance with the
Islamic finance concept
of Bai’ Bithaman Ajil &
comply to Malaysian
Refinanced and
Syariah)
converted to Sukuk
Debt Refinancing &
Restructuring (Issuance
of PLUS Bonds,
Redeemable
Convertible Bonds)
Migration from conventional
loan to Shariah-compliant SUKUK
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Sukuk for Infrastructure Financing
Why SUKUK ?
Promote good business practice - avoid interest, uncertainties, overleveraging and speculation, backed by real economic activities
Nature of SUKUK
Transactions
Gaining prominence as an alternative source of funding for large scale &
long-term infrastructure projects
Greater governance and transparency that promotes ethical and fairness
Investor Base
Tapping wider investor base - Islamic and conventional investors;
Financing Cost
Competitive pricing vis-à-vis bond – strong demand creates better pricing
Tax Incentive
Special tax incentive in Malaysia to promote SUKUK
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PLUS Privatisation in 2011
• In November 2011, PLUS was privatised at a total value of RM23.0 billion
following a joint-offer by UEM Group Berhad and the Employee Provident Fund
Board (“EPF”).
• The key objective of the privatisation exercise was to rationalise the overall toll
structure of all the highway concessions in PLUS Group. It was a landmark
initiative across all highways in Malaysia as PLUS Group owns about 60% of the
tolled highways throughout the country.
• Based on the complexity and the high profile nature of the transaction, it was
pertinent that the interest of various stakeholders were protected. The
stakeholders include highway users of Malaysia, bondholders of PLUS’s existing
debt securities, the shareholders as well as the Government of Malaysia.
Stakeholders
Rationale
Bondholders and Shareholders
¾ The rights of the bondholders were protected.
¾ Fair exit price for the existing shareholders.
Promoters (UEM Group & EPF)
¾ Acceptable return on investments.
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A Landmark Sukuk Issuance
• As part of the privatisation, PLUS established the following Sukuk programme on 12
January 2012:
Sukuk Programme
Nominal
Value
(RM bil)
Amount issued on
12 Jan 2012
(RM bil)
(i)
Islamic Medium Term Notes (“Sukuk”)
23.35
19.60
(ii)
Islamic MTN programme, irrevocably and
unconditionally guaranteed by Government of
Malaysia (GG Sukuk)
11.00
11.00
34.35
30.60
Total
• The highest AAA rating was accorded for the RM23.35 bil Sukuk by Malaysian Rating
Corporation Berhad (MARC), reflecting the strong credit quality of the transaction and
strength of PLUS.
• Principal Adviser & Lead Arranger : CIMB Investment Bank Berhad
• Joint Lead Managers - 4 local largest banks:
1. CIMB Investment Bank Berhad
2. Aminvestment Bank Berhad
3. Maybank Investment Bank Berhad
4. RHB Investment Bank Berhad
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Significance of PLUS’ Deal
•
As at execution date (2011), the privatization transaction of PLUS at the value of
RM23.0 billion was the second largest M&A deal in corporate Malaysian
history and the largest for single company.
•
PLUS Group’s issuance also highlights the size and liquidity of the Malaysian
Debt Capital Markets, as the Sukuk generated very robust interest taking into
consideration the large size of the issuance as well as long tenure of up to 27
years.
•
The Sukuk issuance also represented many FIRSTS, including:
9 the single largest bond issuance in Malaysia to date;
9 the single largest Ringgit-denominated Sukuk issuance to date; and
9 the single largest Sukuk issuance globally (in any currency).
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Challenges & Considerations
• A balanced and “win-win” solution for all stakeholders.
• Large size single issuance of approximate RM30.6 billion.
Market and
Stakeholders
• Long financing tenure of up to 27 years, given that the concession
agreement expires in year 2038
• Given the highly leveraged transaction structure, only the highest
possible rating would enable PLUS to achieve an effective cost of
financing as well as marketability of the Sukuk
Operating
Environment
General
• Risk of policy and regulatory changes
• Threats from upcoming and planned alternative toll roads
• Ensure proper management and implementation of the transaction,
considering the publicity:
^ To minimise execution risk and delay in completing the exercise
^ Proper governance and transparency
^ Clear and proper management of news flow to the public at large
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THANK YOU
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