Press Release
VIS has Assigned Preliminary Instrument Rating to Burj Clean Energy Modaraba’s Short-term Sukuk Issue
Karachi, May 21, 2025: VIS Credit Rating Company Limited (VIS) assigns preliminary instrument rating to Burj Clean Energy Modaraba’s (“BCEM” or “the Modaraba”) Short-term Sukuk (STS) issue of 'A1 (plim)' (“A One (preliminary)”). Short term rating of 'A1(plim)' indicates a strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Rating is aligned with the Company’s entity ratings of A/A1.
BCEM plans to raise an unsecured, privately placed STS, up to PKR 700 million inclusive of green shoe option of PKR 200 million. The proceeds from the issue will be utilized for the purposes of Modaraba’s normal business as allowed under its constitutive documents. The STS employs a Musharakah structure, relying on Shirkat-ul-Aqd. The tenor of the instrument is six (06) months from the date of drawdown. The proposed profit rate is based on 6 months KIBOR plus 175 basis points. Profit is payable at the time of the maturity of the Sukuk along with the principal payment. The Issuer will establish a Sukuk Payment Account (SPA), which will be funded with the full amount of the Sukuk at least ten (10) calendar days before the scheduled repayment date.
Assigned rating of BCEM reflects strength drawn from the profile of its principal sponsor, Burj Energy International Management Limited (BEIML), a Dubai-based entity with global experience in renewable energy development, project financing, and Islamic investment structuring. BEIML’s continued involvement in BCEM is evidenced by the strategic transfer of key assets, including Burj Solar Energy (Pvt.) Limited and JPL Holding Pte. Ltd., which have contributed to early revenue generation and enhanced cash flow stability for the Modaraba. The sponsor’s demonstrated support, combined with the operational expertise of BCEM’s management team, provide support to the assigned rating. Moreover, institutional equity participation by Meezan Bank Limited and Habib Bank Limited (both rated ‘AAA’), enhances Modaraba’s overall sponsor profile.
The rating factors in investments in Pakistan’s renewable energy sector, which offer promising long-term growth opportunities. This potential is underpinned by supportive regulatory policies, a steadily increasing demand for energy, and a growing emphasis on sustainable development. The financial risk profile is supported by a stable rental income stream and expected revenues from forthcoming renewable energy projects, with well-secured counterparties. Profitability is further bolstered by dividend inflows from an associated entity operating as an Independent Power Producer (IPP). Operational risk exposure arises primarily from asset performance and maintenance requirements, which are currently managed through preventive maintenance protocols and the engagement of experienced contractors. The capitalization profile reflects a projected increase in debt to finance new business initiatives over the rating horizon. However, management has indicated plans for enhancing equity through accessing capital markets in the medium term, which are expected to provide support to the capital structure.
Going forward, rating remains sensitive to the Modaraba’s ability to effectively execute its projected plans and maintain asset quality within acceptable limits. Managing and streamlining leverage will be a key focus, while the planned equity injection is considered essential to strengthen capitalization. The rating is underpinned on continued support from the sponsor to address any financial gaps, as and when required.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Non-Bank Finance Company Rating
https://docs.vis.com.pk/Methodologies%202024/NBFCs202003.pdf
Instrument Ratings
https://backupsqlvis.s3.us-west-2.amazonaws.com/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf