EDRA Power Holdings Sdn Bhd is poised to raise RM5.28 billion financing via sukuk for Malaysia’s largest power plant project by year-end, having already completed the due diligence ahead of time, said a senior company executive.
Fion Chan, vice-president II of corporate finance and special officer, said Edra was working towards a financial close by year-end to meet the deadline set under its power purchase agreement with Tenaga Nasional Bhd (TNB).
TNB is the sole customer of the gas-powered plant to be built in Alor Gajah, Melaka, and due for commercial operations in 2021.
“We have already launched our information memorandum with the Securities Commission and made our investors’ presentation. The investors that we are targeting are big names like the Employees Provident Fund, Retirement Fund Inc, insurance companies like AIA, and some fund management companies. We are confident that we will be able to achieve the target set,” she said.
Asked if Edra was looking only for local investors in the financing exercise, she said: “Because Malaysia’s ringgit market is very liquid, we have enough ringgit to support the full project so we will mainly focus on the local market. But of course, whoever is interested can come in and invest.”
Edra has appointed CIMB Investment Bank Bhd as its principal adviser as well as lead manager along with Maybank and RHB Bank.
The RM5.28 billion from the sukuk or Islamic financing structure represents 80 per cent of the total project cost, with the remaining 20 per cent, or about RM1.4 billion, coming from Edra as the equity.
“The reason why the company chose sukuk is because Malaysia wants to become the Islamic investment hub and sukuk has a very long tenure compared with the commercial loan arrangement,” said Chan.
She said under sukuk, the draw-down time was between four and 20 years and this would be very good for power plant development that would also enable Edra to provide cheaper power to consumers.
“We have a ‘AA3’ rating for the sukuk which is the highest rating. That means the company’s cash flow is very healthy. Having such a rating puts Edra on par with other peers in the market like the Jimah East Power plant and YTL,” she added.
Meanwhile, Edra vice-presi dent I for strategic investment, Chong Chooi Wan, said with the Melaka project securing a financial close, the company, Malaysia’s second largest independent power producer was on track on achieving its growth targets.
The next step is for Edra to embark on a new corporate exercise to provide more shares for the company to penetrate further in Malaysia and globally.
“We anticipate this corporate exercise, which we expect to complete before the middle of next year, will garner support from the local and foreign investors who can then participate in the expansion of Edra across Asia, the Middle East, as well as Africa,” said Chong.
Edra, wholly-owned by China General Nuclear Power Corp, already operates power plants in Bangladesh, Pakistan, Egypt and the United Arab Emirates.