Capital markets executive summary | Tue 5 Dec 2023

Capital markets executive summary | Tue 5 Dec 2023

Malakoff and Masdar to develop 1,000MW solar projects in Malaysia

The company and Abu Dhabi Future Energy Company PJSC (Masdar) signed a heads of agreement to conduct technical and commercial assessments on up to 1,000MW solar photovoltaic projects and other renewable energy (RE) projects in Peninsula Malaysia, and jointly finance, develop and manage the projects. Malakoff has an existing portfolio of 151MW consisting of large-scale solar, rooftop solar and small hydro. Masdar has over 17 years’ experience investing in more than 40 countries in renewable energy. It was reported in 2022 that for Masdar’s renewable business, Abu Dhabi National Energy Company (TAQA) holds 43%, Mubadala 33% and Abu Dhabi National Oil Company (ADNOC) 24%. For Masdar’s green hydrogen business, ADNOC holds 43%, Mubadala 33% and TAQA 24%. The company recently signed a memorandum of understanding with the Malaysian Investment Development Authority to invest USD8b (RM37.28b) in 10,000MW RE projects in Malaysia. Malakoff closed at 61 sen. Separately, Cypark signed an MOU with Masdar to develop 1,000MW renewable energy projects and battery energy storage systems. Cypark closed at RM1.

Suria KLCC’s sukuk AAA rating affirmed

RAM Ratings affirmed the rating of the company’s RM600m Islamic medium term notes programme (2014/2044), which reflects its conservative financial profile and the mall’s resilience. Average rental improved from RM35 psf in 2022 to RM36 psf in 8M2023. Occupancy rates rose from 94.8% to 95.6%. Operating profit before depreciation, interest and tax margin fell from 84.5% to 83.2%. Promotional campaigns helped footfall to grow by 48% year-on-year in 1H2023 while total tenant sales gained 37%. About 68% of leases by area expiring in 2023 were renewed at end-Sep 2023 and the remainder are still being negotiated. There were 16 new tenants in 1H2023. Positive rental reversion for leases renewed this year and a well distributed lease maturity profile should keep the mall’s performance steady. Suria KLCC is 60%-owned by KLCC Property Holdings Berhad and 40% by CBRE Investment Management. RAM deems a close relationship with shareholders, KLCC (Holdings) Sdn Bhd and Petronas since it is a core component of KLCC and Petronas is the major lessee of the Twin Towers.
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CGIF’s AAA and P1 ratings affirmed

RAM Ratings affirmed the Credit Guarantee and Investment Facility’s (CGIF) insurer financial strength ratings, which reflect its policy mandate to develop bond markets in Asia and continued support from capital contributors, China, Japan, Korea, the 10 ASEAN countries and the Asian Development Bank. Except for KNM Group Berhad’s default in 2021, its portfolio is sound with 20 successful redemptions so far due to prudent origination strategies and portfolio management. Despite additional provisioning requirements for KNM, CGIF’s financial profile should stay strong given its capitalisation and liquidity. The fund’s liquidity position is supported by USD1.2b highly liquid assets, enough for potential claims. CGIF’s leverage is conservative at 1.1 times at end-Jun 2023. Its outstanding portfolio is unchanged at USD1.9b from end-Dec 2021 to end-Jun 2023. The slowdown in the ASEAN+3 bond markets held back growth in the last 18 months. The fund is 23% exposed to Vietnam and 21% to Thailand, although geographical concentration has come down in recent years. Concentration risks are controlled with prudential limits on sector, industry and country exposures.

UEM Edgenta buys 60% of two UAE companies

Wholly-owned subsidiary Edgenta International Investments LLC signed a sale and purchase agreement and a shareholders’ agreement with United Arab Emirates-based NW Kaizen Holding Ltd to acquire the equity interest in Kaizen Owner Association Management Services LLC and Kaizen AMS Property Supervision LLC for AED43.2m (RM55.1m) cash. UEM Edgenta’s wholly-owned Operon Middle East already provides facilities management services in the UAE and the acquisition will integrate its services with a real estate platform, with the potential of expanding to the rest of the region. The acquisition should be completed by 1Q2024. The counter closed at RM1.

Saudi wealth fund buys 49% of UK-based luxury hotel chain

Saudi Arabia’s Public Investment Fund is taking up the equity interest in Rocco Forte Hotels at an enterprise value of GBP1.4b. The Forte family will retain majority ownership and control. Rocco Forte will stay on as executive chairman and his sister Olga Polizzi as deputy chair. Rocco Forte Hotels was founded in 1996 and has 14 hotels and 20 private villas in the UK, Italy, Germany, Belgium and Russia. There will be 2 new hotels in Milan and 1 in Sardinia that will open in the next 2 years. CDPE Investimenti, which is owned by Italy’s state-backed fund CDP, will sell all 23% of its shareholding in Rocco Forte Hotels. It originally invested EUR80m in the company in 2015. Saudi Arabia’s Vision 2030 is set to diversify the country away from oil and the country is investing in many sectors, including hospitality and tourism. Rocco Forte earned GBP300m in revenues last fiscal year and GBP60m core profit.