Hap Seng Management issues inaugural Sustainability-Linked Bonds
Hap Seng Management Sdn Bhd, a wholly-owned subsidiary of Hap Seng Consolidated Berhad (“Hap Seng” or the “Issuer”), has issued the first tranche of Sustainability-Linked Bonds (“SLB”) under its Unrated Bonds programmes of up to RM5.0 billion in nominal value. The issuance took place last month with OCBC Bank (Malaysia) Berhad (“OCBC Bank”) acting as Sole Lead Manager for the SLB issuance.
The Issuer has adopted a multi-faceted approach towards sustainability by aligning itself with 9 of the 17 United Nations Sustainable Development Goals (“SDGs”), with the aim of safeguarding the well-being of employees and their workplace, limiting the impact of its business operations on the environment, and alleviating the economic and social disparities in Malaysia.
The issuance of the SLBs marks a major milestone in Hap Seng’s sustainability journey, which began in 2014 when the company’s listed subsidiary, Hap Seng Plantations Holdings Berhad, issued its first sustainability report, followed by Hap Seng’s own sustainability statement in 2016. The SLBs were structured in accordance with the International Capital Market Association’s Sustainability-Linked Bond Principles and features a variable interest rate adjustment mechanism based on the achievement of predetermined Sustainability Performance Targets (“SPTs”). The SPTs selected are intended to incentivise the reduction of water and electricity consumption as well as to encourage the use of solar energy and recycling of rainwater.
On the issuance of the SLB, Hap Seng’s Group Managing Director, Datuk Edward Lee Ming Foo said: “Sustainable financing is an important tool to bridge the commercial interests of shareholders with the holistic goal of environmental preservation. We are immensely proud of our inaugural sustainability-linked bonds issuance which reinforces our commitment to environmental sustainability. We intend to do our part as a corporate by contributing towards the preservation of natural resources and the mitigation of the adverse impacts of climate change through the adoption of best practices in our operations. This is in line with our commitment to be a good corporate citizen in harmony with the environment and the communities we serve and achieve sustainable growth and long-term value creation for our stakeholders.”
Ms Tan Ai Chin, Managing Director, Senior Banker and Head of Investment Banking, OCBC Bank, said: “Hap Seng’s inaugural foray into ESG-compliant financing is a reflection of its firm commitment towards a sustainable future, evidencing the encouraging trend of sustainable finance adoption among Malaysian public-listed companies. OCBC Bank has been a prime mover of this targeted initiative, having entered into a Memorandum of Understanding with Bursa Malaysia last month to establish #financing4ESG as part of our continued contribution to further the sustainability agenda among Malaysian corporates and government linked companies. We view the increasing implementation of sustainable finance as an overwhelmingly positive sign that the corporate sector is aligned to our government’s commitment towards achieving carbon neutrality by 2050.”