PACRA Assigns Initial Ratings to Reon Energy Limited - PPSTS - PKR 500mln - Dec'25

The ratings reflect Reon Energy Limited's ("Reon" or "the Company") established track record in renewable energy solutions, with expertise spanning solar, wind, battery storage, and microgrids for energy-intensive commercial and industrial clients. Operating on an EPC model, the Company also offers REFLEX™ (lithium-ion battery platform), SPARK™ (energy management system), and Asset Performance Management services. Revenue streams are anchored by the Commercial & Industrial and Telecom sectors, supported by long-standing relationships with leading conglomerates. In CY25, revenues registered a modest 3.5% decline to PKR 9.0bln; however, profitability remained positive with net income of PKR 368mln, while cash and bank balances strengthened markedly to PKR 1.3bln. Shareholders' equity improved to PKR 1.5bln, with the balance sheet supported by a lean long-term debt position of PKR 261mln following scheduled repayments. To bridge funding gaps between project execution and milestone-based receivable realization, the Company has issued a rated, privately placed, secured short-term Sukuk of PKR 400mln on December 4, 2025. The instrument, structured as a Running Musharakah, carries a profit rate of 3MK + 175 bps payable quarterly, with principal redemption in a bullet payment at maturity in June 2026. PACRA has assessed post-issuance cash flows, comprising receivables from in-hand and newly awarded projects across solar, wind, and battery storage segments. Net cash inflow during the DPA period (Mar–May 2026) amounts to approximately PKR 1,344mln, providing roughly 2x coverage of the principal obligation. The first DPA instalment of PKR 120mln (30% of principal) was successfully deposited, with the second and third tranches pending in April and May 2026 respectively. The secured trade receivables continue to maintain a first-ranking charge of PKR 650mln, exceeding the outstanding principal by the required 25% margin at all times.
Multiple credit enhancement measures underpin repayment discipline. Post-dated cheques covering all three DPA tranches (totaling PKR 400mln) have been issued in favor of the Investment Agent. A PKR 500mln working capital facility serves as a standby liquidity source, while a Letter of Comfort from RMH International DMCC, the UAE-based parent holding 100% equity in the Company, provides pre-default liquidity assurance backed by current assets of PKR 2.78bln, including PKR 507mln in cash and cash equivalents as at June 30, 2025. Timely monetization of the project pipeline, adherence to the DPA schedule, and continued receivable coverage remain the principal considerations for the assigned ratings.

About the Entity
Incorporated in September 2014, Reon Energy Limited develops renewable energy projects for commercial and industrial clients, deploying solar, wind, storage, and microgrid solutions. The Company became a wholly owned subsidiary of RMH International DMCC in October 2024 following the divestment by Dawood Lawrencepur Limited. It is led by CEO Mujtaba Haider Khan and maintains a portfolio exceeding 500 MW of solar PV and 90 MWh of storage capacity deployed across 7,500+ telecom sites, with a growing international footprint in Qatar, UAE, Yemen, Mauritius, Kenya, and Nigeria.

About the Instrument
The Company has issued a Rated, Privately Placed, Secured Short-Term Sukuk of PKR 400mln (green shoe option of PKR 100mln was not exercised) for a six-month tenor. The Sukuk was issued on December 4, 2025 and matures on June 2, 2026. It carries a profit rate of 3MK + 175 bps with profit serviced quarterly and principal repaid at par at maturity. The instrument is backed by a first-ranking charge over PKR 650mln of the Issuer's trade receivables (maintained 25% above outstanding principal); a Debt Payment Account (DPA) under lien of the Investment Agent; post-dated cheques in favor of Sukuk holders; and a Letter of Comfort from RMH International DMCC, the parent entity.