Agrarius establishes Africa’s first JSE listed Shari’ah compliant sustainability related note programme

Agrarius Sustainability Engineered achieved an Africa first when it launched its R10 billion Shari’ah compliant asset backed note programme during September 2022.

The note programme, which is the first of its kind to be listed on the JSE, focusses primarily on financing sustainable transactions and projects in the agriculture sector value chain.

Agrarius is the brainchild of and is administered by 27four Investment Managers, a majority Black women owned South African asset manager.

Commenting on the launch of the note programme, Fatima Vawda, managing director of 27four said, “We are extremely proud to have successfully launched this exciting and innovative new product in the South African capital markets. Despite the critical growth enabling role the agriculture industry plays in the South African economy, historically it has been chronically underinvested resulting in there being a lot of opportunities.”

According to the announcements published by Agrarius on the JSE’s Stock Exchange News Service, the company will in terms of its inaugural issuance under the note programme, afford investors the opportunity to invest in asset-backed Sukuk notes (which in essence, are Shari’ah compliant fixed income debt instruments that generate periodic profit distributions, comparable to corporate or governmental bonds). 

However, what makes a Sukuk note unique is that it represents an ownership interest in an asset or a pool of assets and the proceeds from the issue of Sukuk notes can only be used for ethical purposes – which dovetails neatly with Agrarius’ sustainability goals.  

Agrarius is targeting to raise R500 million with its inaugural issue of Sukuk notes, all of which will be invested in sustainable and green projects in the agriculture sector value chain.

“A significant portion of the transactions and projects being considered are “additional/expansion projects” – mostly existing businesses in the agri-industry that need capital for expansion”, according to Werner Opperman, director of Agrarius and head of alternative strategies at 27four.

Opperman further commented that, “South Africa needs a sustainable agricultural sector if it is to ensure food security in the future. The sector faces a myriad of challenges such as climate change, high input prices and increased pressure on water resources. However with these challenges also come many opportunities.”

Agrarius’ goal is to make a meaningful impact with new and existing businesses in the agri sector, insofar increasing production capacities, ensuring food security, assisting businesses in transitioning to more sustainable practices and employment creation.

Furthermore, by combining its passions for sustainability and agriculture, Agrarius is committed to not only capture financial returns for investors, but also to realise intrinsic returns not replicated in conventional investments.

Such intrinsic returns include, amongst others, an opportunity for investors to participate in and contribute towards a sustainable future for the agriculture sector which is integral to the global economy” says Opperman.

Insofar the Agrarius note programme and the instruments to be issued in terms thereof being Shari’ah compliant, Mufti Ahmed Suliman, member of the 27four Shari’ah Advisory Committee who is instrumental in ensuring the company’s Shari’ah compliant status, commented “given the rapid growth in demand for sustainable investment strategies in the global financial markets, the fact that the rules that govern Shari’ah are set in terms that echo the framework of sustainable investing, means that the time is ripe for products like the Agrarius Sukuk and that it has the potential to bridge the participation gap between Islamic Financial Markets and Western Financial Markets.”