KUALA LUMPUR (May 31): Telekosang Hydro One Sdn Bhd (TH1) is seeking to raise up to RM590 million from its proposed issuance of Islamic debt notes and junior bonds to part finance two small hydropower plants in Tenom, Sabah.

The company plans to issue Islamic medium term notes worth up to RM470 million in nominal value under the Shariah principle of Wakalah Bi Al-Istithmar (Telekosang ASEAN Green SRI Sukuk) and junior bonds of up to RM120 million in nominal value (Telekosang ASEAN Green Junior Bonds), said MIDF Amanah Investment Bank Bhd in a statement today.

MIDF Amanah has been appointed the principal adviser, lead arranger and joint lead manager for the fundraising exercise.

“We are delighted to be principal adviser, lead arranger and joint lead manager for this greenfield mini-hydro green SRI sukuk. It shows that renewable energy and particularly run-of-river hydro is bankable and that the Malaysian capital markets can finance a more environmentally-friendly future for the generations to come,” said MIDF group managing director Datuk Charon Mokhzani.

The sukuk and junior bonds have tenures of up to 18 years and 20 years respectively.

“RAM Rating Services Bhd has assigned a preliminary AA3/Stable rating to Telekosang ASEAN Green SRI Sukuk and preliminary A2/Stable rating to Telekosang ASEAN Green Junior Bonds,” MIDF Amanah said.

TH1 and Telekosang Hydro Two Sdn Bhd have received feed-in approvals from the Sustainable Energy Development Authority Malaysia (SEDA) on Oct 26, 2017 to develop 24MW and 16MW small hydropower plants using run-of-river scheme in Tenom, Sabah.

Meanwhile, the renewable energy power purchase agreements relating to the projects were signed with Sabah Electricity Sdn Bhd (SESB) on March 28, 2019.

The projects have received a Tier-1 Environmental Benefit rating by RAM Consultancy Services Sdn Bhd, the investment bank said.

The sukuk also compiles with the requirement of the Sustainable Responsible Investment (SRI) Sukuk Framework under the SC’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework.

TH1 has developed a framework for its proposed sukuk and junior bonds programme, which contains four key pillars, namely:

(i) utilisation of proceeds,

(ii) process for project evaluation and selection,

(iii)management of proceeds and

(iv) reporting commitments, in order to comply with the transparency and disclosure requirements of the ASEAN Capital Markets Forum’s ASEAN Green Bond Standards and International Capital Market Association’s Green Bond Principles.

The investment bank had lodged the lodgement kits on behalf of TH1 at the Securities Commission Malaysia today.