Agrarius Sustainability Engineered has listed Africa’s first Shari’ah-compliant sustainability-linked Sukuk on the Johannesburg Stock Exchange.
Agrarius Sustainability Engineered has listed Africa’s first Shari’ah-compliant sustainability-linked Sukuk (Sukuk) on the Johannesburg Stock Exchange (JSE). The listing constitutes the inaugural issuance by the company under its USD 546 million (ZAR10 billion) Shari’ah compliant sustainability-related asset backed note program focusing on the agriculture sector, which was registered and approved by the JSE in September 2022.
Agrarius: First round oversubscribed
The inaugural issuance, targeted to raise USD 27 million (ZAR500 million), was oversubscribed by investors. Proceeds from the issuance will be invested in green and sustainable projects and transactions in the agriculture sector value chain.
Agrarius is the brainchild of, and is administered by, 27four Investment Managers, a majority women-owned and led South African firm.
Sukuk instruments are Shari’ah compliant fixed income debt instruments that generate periodic profit distributions, comparable to corporate or governmental bonds. However, what makes a Sukuk unique is that it represents an ownership interest in an asset or a pool of assets. Proceeds from the issue of Sukuk instruments can only be used for ethical purposes.
The Agrarius Sukuk, issued for a term of 36 months, will mature on 28 October 2025. It is expected to start making periodic profit distributions to investors from 30 September 2023. Shari’ah-compliant instruments forbid paying interest and instead reward investors through the sharing of profits.
The Sukuk has been listed on the Sustainability Segment, established by the JSE to assist companies to raise debt for green, social, and sustainable investment projects.
“Transforming the agriculture sector”
“Agrarius’ mission is to transform the agriculture sector from an extractive economy to a circular economy by mobilizing pools of capital to projects that meet both investor return targets and broader sustainability objectives,” said CEO Werner Opperman.
Valdene Reddy, Director of Capital Markets at the JSE, applauded the innovativeness of Agrarius’ sustainability-linked Sukuk, stating it will lead to capital formation in the agricultural sector, which is currently severely under-served by traditional finance.
“The JSE encourages product innovation in the sustainability space. This issuance by Agrarius showcases an investment approach that differs from traditional models. We welcome the mechanisms to enable access to funding to grow pivotal sectors within the South African economy,” commented Reddy.
South Africa is expecting GDP growth of 1.9% in 2022.