MUFG Malaysia has closed a US$25mn Islamic green trade facility with the automotive arm of trading conglomerate Sime Darby.
The transaction represents one tranche of a US$50mn facility. The other US$25mn tranche is exclusively an Islamic finance facility.
It is the first short-term trade transaction that is both shariah-compliant and aligned with the Green Loan Principles and the guidelines of Bank Negara Malaysia, the country’s central bank, for both MUFG and Sime Darby Motors, the lender says.
The facility will be used to provide working capital needed for the production of electric vehicles as well as support other green requirements.
“This is a reflection of our commitment to engaging in sustainable partnerships, in driving sustainable innovation and technology,” says Andrew Basham, Sime Darby Motors’ managing director.
Colin Chen, MUFG’s head of ESG finance for Asia Pacific, says the bank is committed to creating “a just and equitable transition across Asia”. “This transaction’s unique structure further aligns Sime Darby Motor’s financing programme with their goal of greening their vehicle portfolio,” Chen says.
Goh Kiat Seng, head of global corporate banking for MUFG in Malaysia, adds that the lender is “honoured for the opportunity to demonstrate our long-term banking commitment and partnership with the Sime Darby Group, especially Sime Darby Motors, which has embarked on a fast-growing green vehicle journey for Malaysia”.
MUFG says it is aiming to invest a cumulative total of ¥35tn (US$239bn) in sustainable finance globally by 2030, and achieved just over 70% of this target between 2019 and 2022.
It became the first Japanese bank to offer Islamic banking products and services after establishing an Islamic banking arm in Malaysia in 2008.
At the start of the year, MUFG closed its first sustainable trade finance facility in India to help Tata Power develop two solar power projects, which are expected to generate a combined 220 megawatts of renewable energy for the country.
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