ECONOMYNEXT – Sri Lankan renewable energy firm Vidullanka’s first ever listing of Sukuk, a Shariah-complaint debt security, in the Colombo Stock Exchange will open up new opportunities through Islamic financing for other companies in the country, a top official said.
Vidullanka PLC will raise Rs, 500 million through its listed, rated, secured, and redeemable Sukuk issue. This will be the island nation’s first ever interest-free and Shariah-complaint debt security listing. Subscriptions will open on June 17.
“This Sukuk, while it is important for Vidullanka, I think for finance industry and the capital market, it’s a very big step because this will open up many avenues of Islamic financing for many players,” Riyaz Sangani, CEO at Vidullanka told reporters at a media briefing to announce the Sukuk.
“I hope this will serve as a stepping stone to greater diversification in the Shariah compliant financial instruments that are offered, and pave the way to the growth of Sri Lanka’s capital markets,” Sangani separately said in a statement.
“This transaction is expected to act as a catalyst for the growth of Islamic capital markets in the country and provide a model for other corporates to explore alternative sources of funding.”
Vidullanka has offered 50,000, 5-year Sukuk, each at 100 rupees, with two options for investors.
The first option is a fixed (Ijarah) rate of 10.75 percent payable every six months giving an effective return of 11.04 percent a year.
The second option is a 5-year floating rate option will pay in line with the average weighed prime lending rate (AWPLR) with a 13.00 percent cap and a floor of 10 percent.
Both fixed and floating rate of returns are given as the rental payment for lease with the investors in the Sukuk will be considered as the partial owners of the existing plant and machinery belonging to the Lower Kotmale Oya mini hydro power project of Vidullanka PLC.
Sukuk listing is now approved by the Colombo Stock Exchange and the regulator Securities and Exchange Commission (SEC) of Sri Lanka
Applicants are allowed to invest in the Sukuk subject to the minimum subscription of 100 Sukuk for 10,000 rupees and in multiples of 100 Sukuk thereafter.
Out of the 500 million rupees expected to be raised, the company will use 400 million to settle its short term loans while the rest 100 million will be used as working capital.
Vidullanka posted a 63 percent gain in its net profit in the 2024/25 financial year ended on March 31. It posted 1.5 billion rupee profit in the year, compared to 925.8 million rupees in the previous year.
The Sukuk offer is managed by NDB Investment Bank with ADL Capital as joint arranger.
The securities are rated A+ (lka) by Fitch.
In its prospectus, the company said the investment is subject to few risks including price Ijarah payment rate, liquidity, duration, Shariah compliance, tax policy changes, legal, and regulatory. (Colombo/June 11/2025)
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