Royal Group inks the world’s first Islamic green financing agreement of $250 million in the hospitality sector with Maybank Singapore

Royal Group of Companies (“Royal Group”) has obtained the world’s first Islamic green financing in hospitality from Maybank Singapore. The total financing of S$250 million is for the upcoming Raffles Sentosa Resort & Spa Singapore and the existing Sofitel Singapore Sentosa Resort & Spa. This marks Royal Group’s first foray into sustainability finance.

The principles of sustainability are closely aligned with the objectives of Shariah which promotes and enhances sustainable development through the principles of fairness, equality and ethics. These Islamic green-financed hotels will embed Shariah-compliant and sustainability concepts in its building design and operations. With green and socially responsible commitment, Royal Group is aiming to improve its business sustainability which bodes well for environmental conservation, as well as enhance operation efficiency which will bring about financial savings in the long term.

Mr Bobby Hiranandani, Co-chairman of Royal Group, said, “It’s a first in the world for a hospitality developer and owner to embark on Islamic green financing. Raffles Sentosa is envisaged as a prestigious landmark icon of Singapore overlooking the beautiful South China Sea, and we only want to have the best design, top-class facilities as well as appoint a world-class operator to enchant our well-heeled customers. Being Shariah-compliant is not only going the sustainable route, but also being ethical in our approach in building and managing both properties. This is what makes our Group unique – to think long term and be one step ahead of the curve. When international travel resumes after Covid-19, customers would have a different mentality; they would want to live in a well-run property that is conscientiously built to blend in sustainably and harmoniously with the environment which Raffles Sentosa and Sofitel Singapore Sentosa offer.”

The main difference between a conventional green loan and a Shariah-compliant green financing is that the latter is structured in accordance with Shariah principles where instead of charging interest (as this is not allowed under Shariah), a bank will charge the client  profit in consideration of the financing. There are additional features of Shariah-compliant financing which benefits the client, such as (i) fixed ceiling rate feature embedded in the facility structure to provide an element of certainty to client so that they will not pay more than the contracted rate and (ii) non-compounding of profit/charges in the event of late payment of amounts due.

Mr Gregory Seow, Head of Global Banking at Maybank Singapore, said, “Maybank Singapore is at the forefront of developing innovative financing solutions to fund new projects and ventures in sustainability solutions and contribute towards building sustainable communities. What stood out in Shariah-compliant financing is that it benefits the customers through its product features as well as grant them access to a wider customer or investor base. For example, corporates who take up Shariah-compliant green financing may attract a wider or new customer base – domestic and international customers who opt for and support goods and services offered by ethical, sustainable and responsible companies which are also aligned with Shariah principles. Moving forward, Maybank Singapore expects to see a greater convergence between the products and services offered under both the conventional and Islamic banking systems premised on ESG.”

As part of the Royal Group’s sustainability journey, it is upgrading Sofitel Singapore Sentosa Resort & Spa, a five-star luxury resort hotel with 215 rooms and suites situated atop the cliff above Tanjong Beach, to be assessed for BCA Green Mark Gold certification.

Raffles Sentosa Resort & Spa Singapore, planned for 62 exclusive villas across more than 10 hectares of sprawling tropical gardens, is preparing to achieve BCA Green Mark GoldPlus certification when it is completed at the end of 2022. The resort will be the first villa-only hotel in Singapore and is designed by renowned design studio, Yabu Pushelberg. The villas will range from 260 square metres (sqm) for the one-bedroom villas to 450 sqm for the four-bedroom villa, each with its own private pool and terrace area.

There will also be ballroom, spa and meeting facilities to complement the staying experience at Raffles Sentosa. The hotel showroom will be open for viewing and advanced booking at 2 Bukit Manis Road, Sentosa, from May 2021 onwards.

Maybank Singapore has a strong track record in arranging and participating in sustainability-linked loans and green loans, totalling S$4.5 billion to date. The financing of Raffles Sentosa and Sofitel Singapore Sentosa is the first Islamic green financing deal in the hospitality sector in the world.