MUFG has facilitated and closed a RM 1.51 billion (US $379 million) Islamic Finance-based cross-border syndicated financing transaction on behalf of STC Malaysia Holding. The syndicated financing will provide financing in MYR (Malaysian Ringgit).
This transaction marks the first time a Japanese financial group has acted as a Mandated Lead Arranger in an Islamic syndicated arrangement in MYR.
MUFG's participation as syndicated financier and investment agent signify its increasingly active participation in the Islamic financial market. The provision of investment agency service by MUFG in this deal reflects its continuous effort to expand its Islamic finance capabilities to remain at the forefront among the Japanese banks to provide the full range of Shariah compliant services
STC Malaysia is a subsidiary of Saudi Telecom Company, the Gulf's largest telecommunications operator by market value. The Islamic financing will go towards refinancing debt originally used for 50% subscription in 50 years Junior Sukuk issued by BGSM Malaysia.
MUFG's Malaysian subsidiary acted as one of the Mandated Lead Arrangers, with its Kuala Lumpur and Dubai branches collaborating with the client to facilitate the transaction.
The syndication uses a Shariah-compliant structure known as the commodity murabaha to facilitate the financing arrangement. It involves the financier selling the customer commodities on deferred payment basis and subsequently the customer selling the commodities on spot basis to receive cash. This cost, plus the mark-up sale, facilitates the achievement of liquidity to the client via a Shariah-compliant mechanism. MUFG's role in the financing arrangement as an investment agent is to manage the cash flows and carry out the commodity murahaba transactions in the facility
Elyas Algaseer, deputy Head of MUFG in the Middle East, said:
"We are breaking new ground and completing innovative transactions like this to address more complex Shariah compliant needs of our clients.
"To have been appointed the investment agent and mandated lead arranger alongside European banks, marking a first for Japanese financial institutions in this space, is a significant moment. We are delighted to have completed this transaction with STC Group and look forward to a strong future Islamic finance pipeline."
Yuta Uchiyama, President/Chief Executive Officer, Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad said:
"With a longstanding presence in two of the world's leading Islamic banking hubs, we were able to pool together our resources, experience and expertise to satisfy the unique requirements of our client. This has not only demonstrated our rising stature as a leading player in the Islamic financing arena, but also the global nature of our business."