Issuer: RP Hydro (Kelantan) Sdn Bhd
Size: RM975 million
Structure: Wakala bi al-istithmar
Banks: CIMB (sole adviser and arranger)
Date: July 2023
To stand a chance of increasing its renewable energy capacity to 31% of total energy capacity by 2025, Malaysia needs to invest substantially in wind, solar and hydro power generation. It also needs to use viable and innovative ways to help fund the investment.
Issuance of sustainable Islamic finance instruments is one key funding option, as demonstrated by the success of the RM975 million ($204 million) green SRI sukuk from hydropower group RP Hydro Kelantan (RPHK) last summer – which is Asia’s best Islamic project finance deal this year.
The transaction, solely structured, arranged and executed by CIMB, was important for two reasons: it was the country’s largest, ringgit-denominated, greenfield non-recourse project financing; and the first hydro project financing deal funded through the domestic debt capital markets.
Clearly a key impact of this is the potential for other renewable projects in the country – and the broader Asean region – to be financed in this way.