Vidullanka breaks new ground with Sri Lanka’s first-ever listed Sukuk

Vidullanka CEO Riyaz Sangani (centre) addresses the launch of the country’s first listed Sukuk, a Shariah-compliant debt instrument. Others (from left): Vidullanka Chief Financial Officer Mafaz Ansar, Adl Capital Managing Director Ishrat Rauff, Vidullanka Director Rizvi Zaheed, NDBIB Chief Operating Officer Kaushini Laksumanage, and Senior Vice President Eshani Thenuwara – Pic by Ruwan Walpola 

• Initiative marks milestone in ethical investing and capital market diversification
• Sukuk issuance approved by CSE and SEC, raising Rs. 500 m with subscriptions opening 17 June
• Vidullanka CEO Riyaz Sangani says it offers fixed and floating return options, with investors becoming partial owners of mini hydropower plant under Shariah-compliant lease structure
• Developed with input from regulatory bodies and international Shariah scholars, backed by Fitch A+(lka) rating and led by NDB Investment Bank and Adl Capital
• Move will catalyse growth in Sri Lanka’s Islamic capital markets, provide new funding model for corporates

By Janani Kandaramage

Renewable energy company Vidullanka PLC yesterday announced the launch of the country’s first listed Sukuk, a Shariah-compliant debt instrument, signalling a bold step towards ethical investing and capital market diversification.

Vidullanka CEO Riyaz Sangani observed the Sukuk listing as more than just a financing initiative for the company. 

“This Sukuk, while important for Vidullanka, is a much bigger step for the finance industry and capital markets,” he stated, positioning the move as a watershed moment in the evolution of Sri Lanka’s financial instruments.

The issuance – approved by both the Colombo Stock Exchange (CSE) and the Securities and Exchange Commission (SEC) – marks the country’s first-ever listed, rated, secured, and redeemable Sukuk, raising Rs. 500 million through 50,000 units priced at Rs. 100 each. With subscriptions set to open on 17 June, proceeds will be used to settle Rs. 400 million in short-term debt, with the remainder earmarked for working capital.

The Sukuk offers investors two return options: a fixed-rate (Ijarah) scheme yielding 10.75% semi-annually (effective annual return of 11.04%), and a floating-rate alternative tied to the Average Weighted Prime Lending Rate (AWPLR), with a floor of 10% and a cap of 13% over five  years.

Outlining the product’s alignment with Islamic financial principles – which prohibit interest and require asset backing – Sangani explained that investors will receive rental payments under a lease structure and be deemed partial owners of Vidullanka’s Lower Kotmale Oya mini hydropower plant.

The instrument was developed through extensive consultations with regulatory bodies, legal experts, and four accredited Shariah scholars from Saudi Arabia, Malaysia, South Africa, and Sri Lanka. 

NDB Investment Bank (NDBIB) serves as the lead manager, while Adl Capital joined as co-arranger and Hatton National Bank PLC was appointed trustee. The Sukuk is backed by a Fitch rating of A+(lka).

Sangani added: “This is a product that bridges religious doctrine, investor protection, and market performance. It required coordination across time zones, regulatory frameworks, and legal systems.”

The minimum subscription requirement is 100 units (Rs. 10,000), with applications accepted in multiples of 100 thereafter. Interest in the issue has already been noted from regional financial institutions and members of the Sri Lankan diaspora.

The step comes amid Vidullanka’s robust financial performance, with net profits soaring by 63% in the 2024/25 financial year to Rs. 1.5 billion, up from Rs. 925.8 million the previous year.

While the company acknowledges potential risks in its prospectus – including fluctuations in Ijarah payments, regulatory shifts, and liquidity issues – it has emphasised the structured and transparent nature of the Sukuk to mitigate such concerns.

The CEO acknowledged the broader significance of the initiative, stating: “This transaction is expected to act as a catalyst for the growth of Islamic capital markets in the country. It provides a model for other corporates to dabble in alternative sources of funding.”