Led by respected property industry players, EcoWorld Development Group Berhad (“EcoWorld Malaysia”) was established in 2013.
EcoWorld Malaysia has over 8,000 acres of landbank spread over the Klang Valley, Iskandar Malaysia and Penang, with property sales of RM19.8 billion achieved as at 15 June 2020. Even though we are fortunate to have had our growth funded by our panel banks, rapid expansion required us to source for alternative funding options for Eco Botanic Sdn Bhd to fund Eco Botanic, our 325 acres mixed-township development located in Iskandar Puteri.
Despite having strong sales since its very first launch, as a relatively new company, Eco Botanic Sdn Bhd did not have the track record to obtain a rating. As such, we explored working with Danajamin in 2018 to obtain a guarantee for the issuance of unrated medium-term notes (“MTN”) by Eco Botanic Sdn Bhd, which opened access to a wider pool of investors. To-date, with the combined support of Danajamin, our panel bankers and shareholders, Eco Botanic has achieved more than RM1.9 billion sales with approximately 2,000 properties sold.
With Danajamin's help, we were able to partially fund the development costs and working capital requirements.
The decision to work with Danajamin was timely as the regulation on unrated bonds had just been relaxed and unrated bonds became tradeable and transferable, making this instrument more attractive to investors.
The bond market also enabled fixed rate borrowing as a good counter-balance against the largely floating rate loans from banks. The successful issuance of the RM120 million unrated Danajamin Guaranteed MTN by Eco Botanic Sdn Bhd was EcoWorld a significant achievement as it clearly demonstrated the demand for unrated bonds which further diversified the market.
We were guided through the entire issuance process together with the Principal Adviser. With Danajamin’s financial guarantee providing added confidence to the potential investors, this greatly increased the opportunities for investors to subscribe to it.
Further, the assistance provided by Danajamin on the pricing of the bond enabled us to obtain funding at an acceptable all-in-cost, whilst still being able to offer a competitive coupon rate which would be attractive to the bond investors to ensure full subscription. As a young property developer, the Danajamin Guaranteed MTN certainly helped diversify our funding pool to spur the growth of our company.
The backing assisted us to part-finance the development costs and working capital requirements for Eco Botanic. The relationship that was built throughout the collaboration also allowed the teams to work very well together in ensuring timely issuance of the bonds.
Today, Eco Botanic is a vibrant township with excellent infrastructure and lifestyle amenities all in place. Apart from having provided quality homes and business premises for many of our customers in Iskandar Malaysia, the strong economic multiplier effect of our property development activities has also generated a positive impact on many other subsectors of the economy.