SME Bank Bhd, a development financial institution, has made its maiden foray into the Islamic capital market with a RM3 billion government-guaranteed Islamic Medium Term Notes (IMTN) programme.
Managing director Datuk Mohd Razif Mohd Yunus said proceeds from the sukuk with tenure of up to 20 years will be used as working capital.
The first issuance of RM500 million will use the Wakalah structure, which is widely accepted in the Gulf Cooperation Council region, company officials said.
"The sukuk programme will help us revamp our business model to support growth and provide additional funds to assist more SMEs (small and medium enterprises)," he told reporters after the sukuk signing agreement. It was witnessed by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.
Mohd Razif said the bank decided on the sukuk as it believes the situation now is a good opportunity to raise fund.
"It's an opportunity as the government is focusing on enhancing the Islamic finance and banking. Therefore, it is good time to raise money from the market for the purpose of funding and supporting government's agenda," he said.
Mohd Razif said the first RM500 million tranche has a tenure of seven to 10 years, while the second tranche is expected to be issued by the year end or early next year.
"The sukuk will probably yield 3.5 per cent. However, it still depends on a book-building exercise and take-up of the first tranche," he said.
SME Bank appointed AmInvestment Bank Bhd, Kuwait Finance House (M) Bhd and Maybank Investment Bank Bhd as joint lead arrangers and joint lead managers.
SME Bank also signed an agreement to establish a RM263 million 1-SME Rationalised Fund with the Finance Ministry.
Under the programme, 18 funds supervised by the International Trade and Industry Ministry will be rationalised into five groups managed by SME Bank.
Ahmad Husni also launched the RM100 million SME Revitalisation Scheme (SRS).
Also known as the "2nd Chance Programme", the scheme is to assist viable but distressed SMEs to secure additional financing for their businesses. SRS will help facilitate the restructuring of financially-troubled SMEs.
Mohd Razif is confident that the SMEs' targeted contribution to Malaysia's gross domestic product by 2020 can be achieved with the continuous support from the government and financial institutions.
Ahmad Husni said the SME contribution should grow to 41 per cent by 2020 from 32 per cent in 2010.
"This increase would not only come from the growth in the number of SMEs but more importantly, in the value of economic activities that the industry will be creating during that period," he said.