Khazanah continues to lead in Islamic finance and building true value

Khazanah remains focused in its effort to promote understanding and deepening its offering of Islamic Finance products. The Sustainable and Responsible Investment (SRI) Sukuk is one of many of such endeavours. Issued in 2015, Sukuk Ihsan was Malaysia’s first SRI Sukuk which combined the concepts of sukuk financing with philanthropy. This is in line with Khazanah’s key philosophy that Islamic finance must be linked to real economic activities that emphasises socioeconomic development through innovative and fair financial policies and products. Proceeds from Sukuk Ihsan were channelled to Yayasan AMIR, a not-for-profit organisation incorporated to improve the accessibility of quality education in Malaysian government schools.

In June 2017, Khazanah issued the second tranche of RM100 million SRI Sukuk which includes a RM5.0 million retail offering. This was the first time individual investors in Malaysia were presented with a unique opportunity to invest in a social impact sukuk. Investors of Sukuk Ihsan could also give back to society via exercising the sukuk’s unique waiver option which will waive the principal and profit invested at any time during its tenure. Additionally, Khazanah launched a reward crowdfunding campaign to cater to individuals who wish to participate in Sukuk Ihsan but were unable to subscribe to the sukuk directly.

Khazanah’s strong credit standing and reputation have been key to preserving our capability in securing competitive funding. Recently, we priced our eighth Exchangeable Sukuk exchangeable into CITIC Securities Co. Ltd shares on 17 January 2018 which garnered strong investor support across Asia and Europe.Such transactions continue to highlight Malaysia as a competitive and preferred sukuk destination, as evidenced by Malaysia’s prestigious position as the world’s biggest Islamic debt market with 37.5% of global sukuk issuance as at end December 2017 1.

At Khazanah, we are disciplined in managing our liability, and actively match our borrowings with our assets. All our capital market activities are strictly driven by investment requirements with the nation’s long-term economic interest in mind. We are also meticulous in our divestment approach enabling us to reinvest monetised value from our portfolio into new sectors and geographies.

Khazanah does not receive regular infusions of capital from the Government, nevertheless we diligently assist the Government to reduce its contingent liabilities. In 2016, we issued a USD750 million Sukuk to refinance Penerbangan Malaysia Berhad’s USD1.0 billion guaranteed notes. In October 2017, we redeemed RM1.0 billion Khazanah Government Guaranteed Sukuk, making our total redemption to date to RM3.0 billion out of our RM20.0 billion programme. We will continue the Government Guaranteed Sukuk redemptions until the final redemption date in 2032.

Our fundraising activities have advanced and redefined the landscape of Islamic finance since we structured and issued the first Exchangeable Sukuk into Telekom Malaysia Berhad and Axiata Group Berhad shares in 2006. Khazanah went on to issue many world’s firsts including the first Singapore Dollar-denominated Sukuk in 2010 and the world’s first Renminbi-denominated Sukuk in 2011. Khazanah, together with our investee companies, will continue to pave the development of Islamic capital markets by embracing Islamic finance as a preferred method to raise capital and to maintain Malaysia’s position as a global and competitive Islamic finance marketplace.

1 Source: RAM Ratings’ press release “Malaysian sukuk performance remained resilient in 2017”, published on 21 February 2018

Khazanah's Sukuk Issuances

2017

Second Tranche of SRI Sukuk

  • Size: RM100 million

  • First SRI sukuk in Malaysia to feature a retail portion for individual Malaysians to participate

  • Received 3 awards to date

Islamic Social Responsibility Award
-7th Global Islamic Finance Awards (GIFA)

Best Sukuk Deal of the Year in Southeast Asia 2017

IPO (Sukuk) Deal of The Year

Khazanah India Advisors Private Limited

Khazanah India Advisors Private Limited, which was opened in 2009, provides on-the-ground investment advisory support as well as helps to foster closer economic ties between Malaysia and India. The office also serves as a conduit for Indian companies exploring investment opportunities in Malaysia.

Financial Review

Strong financial capability and sustainable financial growth are vital towards fulfilling our commercial and strategic roles.

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