Avaland Bhd Launches RM1 Billion Sukuk for Future Growth

Leading property developer Avaland Bhd, formerly known as MCT Bhd, has made headlines with its strategic financial maneuver by launching a RM1 billion Islamic Medium-Term Notes Programme. This innovative funding initiative aims to fuel the company's future developments, land acquisitions, and various capital expenditures, thus positioning Avaland Bhd as a forward-thinking player in the competitive property landscape. The programme is designed to attract sustainable and responsible investors while adhering to the shariah principle of Murabahah, making it a unique offering in the realm of Islamic finance.

The RM1 billion sukuk initiative is part of Avaland's broader vision to integrate sustainable practices into its operations. By offering a diverse range of sukuk, including SRI-linked and ASEAN sustainability-linked sukuk, the company aims to cultivate a more environmentally-conscious investment environment. The project is not only anticipated to support Avaland’s growth trajectory but also to align with the increasing demand for responsible investment options that yield both financial returns and promote positive social impacts.

Overview of Avaland Bhd

Avaland Bhd has established itself as a prominent name in the Malaysian property development sector. With a legacy spanning over the years, the company has shifted its focus from merely constructing residential properties to embracing a comprehensive approach that incorporates sustainability and innovation. This transition highlights Avaland's commitment to building not just homes, but communities that enhance the quality of life for their residents.

Previously known as MCT Bhd, the rebranding to Avaland Bhd marks a strategic pivot towards embracing a philosophy that prioritizes sustainability. The company has been recognized for its forward-thinking projects, and with the recent launch of the RM1 billion sukuk, it seeks to further strengthen its market position while promoting responsible investment practices.

Launch of RM1 Billion Sukuk

The launch of the RM1 billion Islamic Medium-Term Notes Programme represents a significant milestone for Avaland Bhd as it seeks to harness the potential of the Islamic finance market. Sukuk plays a pivotal role in raising capital, particularly in the context of Sharia-compliant investments, which have gained traction among a diverse range of investors. The issuance not only boosts Avaland's capital structure but also underscores its commitment to transparent financing mechanisms that resonate well with ethical investment principles.

Through this sukuk initiative, Avaland Bhd aims to secure funding focussed on future expansions and innovative projects, signaling a strong intention to enhance its development portfolio. The incorporation of various sukuk types indicates a strategic flexibility that allows the company to cater to different investor preferences while adhering to Sharia-compliant guidelines.

Purpose and Utilization of Funds

The funds raised through the RM1 billion sukuk will be instrumental in facilitating several key activities for Avaland Bhd. The primary areas where the capital will be utilized include:

• Future Developments: Expanding the company's portfolio of residential and commercial properties that align with the evolving demands of the market.
• Land Acquisitions: Identifying and securing prime land spots for upcoming projects that have long-term growth potential.
• Capital Expenditures: Investing in infrastructure and technology enhancements to improve operational efficiency and sustainability standards.

By channeling the sukuk proceeds into these vital areas, Avaland Bhd aims to not only foster growth but also ensure that its advancements align with sustainable practices, enhancing shareholder value in the process.

Types of Sukuk Offered

The diversity of sukuk types available in the RM1 billion issuance avails Avaland Bhd the opportunity to reach a broader spectrum of investors. Among the various offerings, key types include:

• SRI-linked Sukuk: These sukuk are designed to fund projects that have a clear sustainable impact, appealing to socially responsible investors.
• ASEAN Sustainability-linked Sukuk: Aimed at promoting environmentally sustainable projects across the ASEAN region, these sukuk align with regional development goals.

The variety in sukuk offerings demonstrates Avaland Bhd's commitment to appealing to a diverse set of investors who prioritize sustainability and ethical investment opportunities. This strategic planning reflects the increasing importance of environmental consciousness in financial decision-making.

Commitment to Sustainable Development

Avaland's ongoing dedication to sustainability is a cornerstone of its operational philosophy. The launch of the RM1 billion sukuk is not simply a financial maneuver; it is a manifestation of the company’s commitment to sustainable development practices. The projects funded through this sukuk will significantly contribute to enhancing community well-being and urban development.

Avaland Bhd seeks to address social and environmental challenges by embedding sustainability in its project designs and execution. The company’s strategic initiatives focus on creating energy-efficient properties and promoting green building practices. By investing in sustainable development, Avaland aims to generate positive social impacts while ensuring economic viability.

Financial Backing and Ratings

The financial strength of Avaland Bhd is further underscored by its robust ratings and backing. The RM1 billion sukuk has been rated AA3 with a stable outlook by RAM Rating Services, which signifies a strong credit quality and capacity to meet financial commitments. This rating enhances investor confidence and market appeal, ensuring that the sukuk will attract interest.

The firm's solid earnings are supported further by an impressive RM852 million in unbilled sales as of March 31, 2024. This pipeline of projects not only ensures steady revenue flow but also substantiates the financial health of Avaland Bhd, making the issuance of sukuk a well-timed financial strategy.

Role of Alliance Islamic Bank and AmInvestment Bank

The successful execution of the sukuk programme is fortified by the partnership with experienced financial institutions. Avaland Bhd has engaged Alliance Islamic Bank and AmInvestment Bank to manage the sukuk issuance. These institutions will play a crucial role in structuring, underwriting, and advising on the issuance process, ensuring that the sukuk aligns with both regulatory standards and investor expectations.

The collaboration with these established banks marks a significant step for Avaland Bhd in enhancing its credibility and operational expertise in the sukuk market. Their extensive experience in managing Islamic financial products will be instrumental in the success of this initiative.

CEO Insights on Growth and Sustainability

CEO Apollo Bello Tanco has been vocal about the importance of the sukuk programme in driving Avaland Bhd's growth strategy. His insights provide a clear vision of what this initiative means for the company’s future. Tanco emphasizes that the RM1 billion sukuk is pivotal not only for capital raising but also for promoting sustainable practices within the property sector.

He noted that with the modern shift towards sustainable markets, investors are increasingly looking for projects that can deliver both financial results and positive community impacts. Tanco’s leadership reflects a progressive mindset that is essential for navigating the evolving landscape of property development in Malaysia.

Future Outlook and Strategic Goals

Looking forward, Avaland Bhd aims to leverage the funds raised from the RM1 billion sukuk to achieve its strategic goals. The company's future outlook is centered around continuing its commitment to sustainability while ensuring robust financial growth and market competitiveness.

Some key strategic goals include:

• Expansion of Development Projects: Launch innovative residential and commercial developments that incorporate cutting-edge sustainability practices.
• Enhancing Operational Efficiency: Through capital expenditures, Avaland will invest in technology and processes that enhance operational efficiency while reducing environmental impact.
• Strengthening Investor Relationships: By offering diverse sukuk options, Avaland aims to build lasting relationships with socially responsible investors committed to sustainable development.

In conclusion, the launch of the RM1 billion sukuk marks a significant chapter in the journey of Avaland Bhd. The company's focus on sustainable and responsible finance resonates well with the evolving investment landscape. As Avaland Bhd navigates this ambitious path towards growth and sustainability, its commitment to creating integrated, eco-friendly communities will undoubtedly enhance its standing as a leading property developer in the region.

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