Reon Energy Limited (“Reon” or “the Company”) was incorporated on September 15, 2014, as a public unlisted company to develop renewable energy projects for commercial and industrial consumers. Initially a subsidiary of Dawood Lawrencepur Limited (DLL), part of the Dawood Hercules Group, the Company has since evolved into a leading provider of solar, storage, and microgrid solutions. Its early projects included solar tube wells, telecom solar systems, and a 125 kW solar PV installation, followed by key milestones such as Pakistan’s first corporate PPA with Sindh Engro Coal Mining Company and the commissioning of the country’s largest battery energy storage system for Lucky Cement in 2024. To strengthen reliability and performance, Reon introduced in-house technologies—SPARK™, an energy asset management platform, and REFLEX™, a lithium-ion storage solution. Today, the Company serves Commercial & Industrial as well as Telecom segments, offering turnkey renewable solutions across cement, textile, FMCG, automotive, and dairy sectors. With a portfolio exceeding 500 MW of solar PV and 90 MWh of storage capacity deployed across 7,500+ telecom sites, Reon also maintains a growing presence in international markets, including Qatar, UAE, Yemen, Mauritius, Kenya, and Nigeria.

Reon is a wholly owned subsidiary of RMH International DMCC, a UAE-based company engaged in high-voltage dry-insulated technologies for power utilities and managed by Reon’s leadership team, ensuring strategic alignment. The transition from Dawood Lawrencepur Limited (DLL) to RMH was finalized in October 2024, when DLL divested its stake to Juniper International FZ LLC, owned by Mr. Kashif Naseem Afzal. Mr. Afzal is a seasoned entrepreneur with diversified interests in power, natural resources, energy transition, and real estate, backed by significant financial strength from UK property holdings and global investments. While the new ownership brings strategic direction and international linkages, its capacity to extend direct financial support to Reon is yet to be demonstrated given the recent acquisition. Going forward, RMH’s ownership is expected to be restructured, with around 50% shareholding to be transferred to an existing Reon board member, while the balance will remain with the original sponsor. The transaction is at an advanced stage, pending requisite approvals.

The Company follows a management-driven governance framework, with key leadership positions including the Chief Executive Officer (CEO), Chief Commercial & Strategy Officer, and Chief Financial Officer (CFO). The Board is chaired by the CEO, Mr. Mujtaba Haider Khan, who brings extensive experience in strategy, technology, and entrepreneurship, having held senior roles at Dawood Hercules Corporation, British Telecom in London, and multiple startups. Supporting him, Mr. Mudasar, Chief Commercial & Strategy Officer, holds a BS in Electrical and Computer Engineering from Oklahoma State University, USA, and brings over two decades of telecom sector experience with Huawei Technologies and Telenor, where he integrated telecom and energy management solutions. The CFO, Mr. Waleed, is a Chartered Accountant with prior experience at KPMG, Pepsi, and Zong, overseeing financial management, banking and investor relations, and alignment of financial strategy with corporate objectives. While the Board provides strategic oversight, its governance practices remain at an evolving stage: formal committees are yet to be established, board meetings are held annually, and minutes are not formally documented. Nevertheless, the Company maintains financial transparency, with M/s A.F. Ferguson & Co., Chartered Accountants (a QCR-rated Category ‘A’ firm on SBP’s panel), serving as external auditors and has issued an unqualified opinion on the financial statements for the year ended December 2024.

Reon’s organizational structure comprises eight departments—Finance, HR & Admin, Technical, Sales & Commercial, Product Development, Transformational & QHSE, Asset Performance Management, and Marketing—each led by professionals reporting directly to the CEO, Mr. Mujtaba Haider Khan. The management team includes senior leadership overseeing finance, commercial operations, technology, and project execution, providing strong oversight and strategic direction. While no formal management committees exist, monthly meetings ensure coordination, and the overlap between the Board and management allows for agile decision-making. The Company has implemented ORACLE ERP (FICO module) to strengthen its MIS framework. Its control environment is supported by defined policies, accountability mechanisms, and IT-enabled solutions, ensuring effective internal controls, compliance, risk mitigation, and operational efficiency.

Pakistan’s power sector is undergoing a significant transition toward renewable energy, with rising electricity costs driving demand for sustainable alternatives. Supported by government policies, net metering, and growing awareness, solar rooftop installations gained strong momentum in FY23 and FY24, particularly in the commercial and industrial (C&I) sectors where businesses seek cost reduction and energy security. Advancements in solar technology, along with increasing adoption of battery storage solutions, have further accelerated this trend. Within this landscape, Reon has established a leading position in the C&I segment, leveraging its early-mover advantage and reputation for delivering large-scale solar, hybrid, and advanced lithium-ion storage projects across industries such as cement, textile, telecom, and FMCG. Its expertise in integrating storage solutions enhances reliability and load management, positioning the Company as a comprehensive energy solutions provider. Reon’s revenues are primarily project-based, generated from three segments: C&I, Telecommunications, and Operations & Maintenance (O&M) services. In CY24, revenues recorded a notable year-on-year increase, with C&I contributing the largest share, followed by telecom, while O&M provided a smaller but recurring stream, supporting revenue stability. Margins in CY24 declined slightly at the gross and operating levels due to competitive pressures, though net margins improved significantly on account of a one-off loan write-back from DLL. Going forward, margins are expected to remain stable, supported by a healthy project pipeline. Despite its strengths, Reon’s business model carries inherent risks. First, being predominantly project-based, revenue sustainability depends on continuously sourcing and securing new projects, making a strong pipeline critical. Second, competition in the sector is intensifying, with both smaller players and large conglomerates such as K-Solar entering the market, exerting pressure on pricing and margins. Third, performance risk remains material, as project cash flows are linked to the achievement of key milestones and contractual deliverables. Timely completion of projects and adherence to agreed terms are essential not only for payment realization but also for maintaining credibility and access to financing. Reon’s diversified customer base, recurring O&M income, strong track record, and continued focus on innovation and efficiency support its long-term positioning, while its ability to sustain a sound pipeline and manage competitive and performance risks will be central its operational strength.

Reon’s working capital cycle is shaped by its project-based business model. Operations typically begin with advance payments from clients, secured through insurance-backed performance guarantees. As projects progress, trade receivables are recognized against completion milestones, while payables comprise advance payments for imported equipment—usually backed by LCs—and credit-based arrangements for local inputs such as civil works and cabling. In CY24, receivables increased in line with business expansion. The Company has limited reliance on short-term borrowings, meeting project execution requirements primarily through unfunded facilities such as LCs and guarantees, which are inherent to its business model. To bridge funding gaps between project execution and the realization of milestone-based receivables, the Company is, for the first time, planning to raise liquidity through a rated, privately placed, secured short-term Sukuk of PKR 500mln (inclusive of a PKR 100mln green shoe option). The Sukuk is designed as a bridge-financing arrangement, supporting timely achievement of project milestones and realization of revenues in line with contractual terms, while also diversifying the funding base. Repayment is expected to remain comfortably supported through project-related receivables. In order to assess Sukuk repayment capacity, PACRA has evaluated the Company’s projects across multiple dimensions. This includes a review of in-hand projects, whereby PACRA examined the status of ongoing contracts, milestones achieved and pending, and matched expected cash inflows and outflows with contractual schedules. Additionally, PACRA assessed newly signed projects, considering only those formally awarded to the Company, after reviewing contract details, execution probability, and fulfillment of conditions precedent to ensure projected revenues are realized as planned. The evaluation also encompassed foreign projects and contracts with reputable local conglomerates, further strengthening repayment visibility. Based on this assessment, PACRA projects gross inflows of PKR 6,772mln (net cash inflow of PKR 1,344mln) during the Sukuk tenor. For the DPA period (Dec-25 to Feb-26), gross inflows of remains strong PKR 3,895mln (net surplus of PKR 1,864mln), fully aligned with Sukuk repayment requirements. The DPA will be funded progressively, ensuring full coverage of principal and profit obligations by maturity. Of the total projected inflows, a substantial portion is available during the DPA period, providing repayment comfort with coverage of around 2x on a net basis.

In addition to Sukuk-related repayments, the Company’s operating cash flows (FCFO) at the consolidated level remain sound, enabling timely settlement of all liabilities. A notable reduction in interest expenses is expected to further improve debt and interest coverage metrics, while equity is reinforced by higher profitability supported by stable contractual cash flows, ensuring continued financial resilience

The Company is in the process of issuing a Rated, Privately Placed, Secured Short-Term Sukuk of up to PKR 500mln (including a PKR 100mln green shoe option) for a tenure of six months. Proceeds from the Sukuk will be utilized for new projects as well as to bridge financing gaps in ongoing projects until receivables are realized upon milestone completion. The tentative profit rate is 3MK + 175 bps, to be finalized at issuance. Principal will be repaid in a bullet payment at maturity, while profit will be serviced quarterly.

The Sukuk facility holds senior rank in the Company’s capital structure, giving Sukuk holders priority of repayment over subordinated creditors, and is secured against designated receivables. It is backed by a first-ranking charge over the Issuer’s trade receivables amounting to PKR 650mln, including receivables identified in the Letter of Hypothecation. The facility ranks pari passu with other secured creditors and senior to unsecured obligations. At all times, the value of secured receivables shall exceed the outstanding Sukuk principal by at least 25%, in line with the principles of a Running Musharakah structure and subject to approval of the appointed Shariah Adviser.

To ensure repayment discipline, multiple credit enhancement measures are in place.

i) Debt Payment Account (DPA): A dedicated DPA will be maintained under the lien of the Investment Agent and activated during the last three months of the Sukuk’s tenor. The Company will deposit the principal debt service obligation in three tranches as follows:

These deposits shall be made no later than five (5) days before each month-end, ensuring that the DPA is fully funded by maturity. The Company will not have operational access to the DPA during the tenor and has issued irrevocable standing instructions to the account bank.

ii) Post-Dated Cheques: Post-dated cheques in favor of the Sukuk holders have been provided to the Mandated Lead Arranger.

iii) Liquidity Back-Up: A PKR 500mln working capital facility has been arranged to serve as a back-up liquidity source for debt servicing.

iv)Letter of Support: A letter of support from RMH—Reon’s parent company with established international presence—provides coverage against potential shortfalls on a pre-default basis, further strengthening the security framework.