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Maybank IB, AmInvestment Bank To Arrange Westports Sukuk

02 June 2011

5 min read

AmInvestment Bank Berhad (“AmInvestment Bank”) and Maybank Investment Bank Berhad (“Maybank IB”) were appointed as the Joint Principal Advisers/Joint Lead Arrangers/Joint Lead Managers for the 20-year Sukuk Musharakah Programme of up to RM2.0 billion in nominal value (“Sukuk Musharakah Programme”) by Westports Malaysia Sdn Bhd (“Westports”).


Westports had recently successfully completed its maiden issuance of RM450.0 million Sukuk under the Sukuk Musharakah Programme with overwhelming demand by investors. A broad range of local investors including fund managers, insurance companies, financial institutions and government agencies participated in the issue which represents the largest Islamic securities programme established by a port operator in Malaysia.


According to Tengku Dato’ Zafrul Tengku Aziz, Chief Executive Officer of Maybank Investment Bank, "We have tailor-made the Sukuk Musharakah Programme for Westports to tap the domestic Islamic capital markets for long term liquidity to match Westports's capital expansion programme. Besides achieving the objectives of cost efficiency and issue flexibility, the terms of this Programme have also been structured to complement Westports's corporate strategies moving forward. We are proud to be able to value-add to our client."


“As a leader in the Malaysian Islamic Capital Markets, AmInvestment Bank is honoured to work with Westports on this significant financing exercise. The Sukuk Musharakah Programme is structured under the widely accepted Shariah principles of Musharakah to attract wider investor base as well as to support the Malaysian government’s initiatives of the Malaysia International Islamic Financial Centre (MIFC) in establishing Malaysia as an international Islamic financial hub. Coupled with a strong rating of AA+ by the Malaysian Rating Corporation Berhad (MARC), the Sukuk has been well received by investors,” said Pushpa Rajadurai, Managing Director, Corporate & Institutional Banking, AmBank Group.


The Sukuk Musharakah Programme is a flexible and efficient funding platform which enables Westports to tap into the liquidity of the domestic Islamic capital markets, thus improving Westports’ asset-liability management. It provides Westports greater flexibility in issuing Sukuk of various tenures of up to 15 years on a “when-needed” basis and from time to time, thus mitigating a negative carry issue. This Programme is established to fund Westports’ Shariah-compliant general working capital requirements and capital expenditures for its expansion plan at competitive pricing, given its strong credit profile, and underscored by its strengthening credit fundamentals and improved asset quality.


"The purpose of the Sukuk Musharakah Programme is mainly to help finance our expansion programme, as volume has grown tremendously since the recovery of the economy last year. As part of our commitment and our policy of being a supply-driven port, we are now on a drive to build capacity. We have completed almost 70 percent of works on the first 300 metres of Container Terminal 6, which is scheduled to be ready by the third quarter of this year. The reclamation of 11 million cubic feet required for Container Terminals 6 to 9 is also well on-schedule and Phase 1 will be completed by the end of this year. We will then immediately continue with the construction of another 900 metres of quay length. The new Terminal will have an additional 11 cranes and is capable of handling 18,000 Twenty-foot Equivalent Unit vessels," said Ruben Emir Gnanalingam, the CEO of Westports.


Backed by its established presence and recognised as one of the most productive ports in the world, Westports has been registering consistent and strong financial performance for the past years, and its financial profile is expected to stay strong in the medium- to long-term. For the financial year ended 2010, Westports recorded a 17% and 29% increase in revenue and pre-tax profit respectively, on the back of a recovery in global container throughput volumes.