KUALA LUMPUR (Dec 22): FGV Holdings Bhd announced in a bourse filing on Wednesday (Dec 22) that it had plans to raise RM500 million by establishing a sukuk murabahah programme.

The plantation group said it had lodged with the Securities Commission Malaysia (SC) on Monday to establish the sukuk programme after it received an endorsement from the SC’s Shariah Advisory Council for the programme on Dec 10.

FGV said the FGV programme will have a tenure of eight years from the date of its first issue, which shall be made within 60 business days from the date of lodgement with the SC, while each individual issue of sukuk under the programme will have a tenure of one to eight years.

The sukuk murabahah under the programme shall be unrated, according to FGV.

“The proceeds from the sukuk murabahah programme shall be utilised by FGV to refinance its existing financing or borrowings. For the avoidance of doubt, the utilisation of the proceeds of the Sukuk Murabahah programme shall at all times be for syariah-compliant purposes,” the filing wrote.

FGV added that the sukuk programme would provide the plantation group with alternative access to funding in the local debt capital market on top of conventional bank borrowings.

Maybank Investment Bank Bhd is the principal adviser, lead arranger and lead manager for the sukuk murabahah programme, while Maybank Islamic Bhd is the syariah adviser.

For the latest quarter ended Sept 30, 2021, FGV reported total borrowings of RM4.17 billion, comprising RM1.47 billion in long-term borrowings and RM2.71 billion in short-term borrowings, compared to RM6.72 billion in total equity.

The group also held RM1.48 billion in cash and cash equivalents as at Sept 30, which would not be entirely sufficient to meet its debt obligations in the short term.

Assuming that FGV issues the maximum amount possible of RM500 million under the sukuk programme, its total borrowings would increase to RM4.67 billion.

This would bring the group’s gearing ratio to 0.69 times — marginally better than 0.7 times in the previous financial year.

Shares in FGV were unchanged at RM1.48 at the midday break on Wednesday, giving the plantation group a market capitalisation of RM5.4 billion.

Based on Bloomberg data, the consensus of research houses is that the plantation group’s fair value stands at RM1.53, 3.4% higher than its current share price of RM1.48. 

Of the 10 analysts covering FGV, only one from MIDF Research has given the group a “buy” rating, while six have a “hold” rating and three a “sell” rating.

Year to date, FGV shares have appreciated 14.73% or 19 sen.