The promising start to 2005 in Malaysian ABS is set to continue with more companies last week confirming securitization plans. As with most of the activity so far this year, Malaysian firms are again choosing the Islamic securitization route.
First up will be Multi Vest Resources, whose principal business is in oil palm plantations. The company has begun pre-marketing a M$160 million ($42.1 million) deal, with Deutsche Bank Securities on board as arranger and lead manager.
Under the terms of the transaction, Multi-Vest will dispose of plantation assets to the ABS Plantation Assets SPV. The SPV will issue around M$95 million to investors. The remaining subordinated paper will be retained by Multi-Vest subsidiaries, the sellers of the assets, who will then leaseback the assets for 30 years.
Multi Vest will use proceeds from the deal to finance its acquisition of Pinehill Ventures for M$60 million. The notes will be issued under the Islamic principal of Al Bai Bithaman Ajil, which translates as a deferred payment scheme.
Meanwhile, Boustead Holdings, the conglomerate with interests in businesses ranging from plantations to finance, is planning a M$756 million ABS deal, with completion expected in the second half of 2005. The company is undertaking the exercise to improve its gearing ratio, for working capital and to repay a bridging loan it used to buy shares in BP Malaysia.
Local arrangers Affin Bank and Pacific Alliance Capital have been appointed joint advisers.
Like Multi-Vest, Boustead will transfer plantation assets to an SPV and then lease back the assets for seven years with a buy-back option at the end. The SPV will issue M$456 million of Sukuk Al-Ijarah paper, leasing notes, and M$300 million of transferable certificates.
With so much future activity in Malaysia likely to target Islamic investors, the government is keen to promote the country's Islamic financing expertise to Middle Eastern states. Last week the Malaysian Securities Commission signed a memorandum of understanding with its counterpart in the United Arab Emirates for developing the latter's Islamic capital markets.
Meanwhile, Cagamas, Malaysia's state-controlled secondary mortgage company might have taken months to select advisors (HSBC and CIMB) for its upcoming Islamic MBS (see ASR 3/21/05), but will decide who will handle its SME-loans backed offering next week.
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