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Dubai-based retailer Majid Al-Futtaim’s recently-launched green Islamic bond has attracted an ‘interesting’ mix of institutional investors and asset managers from all over the world, its chief executive has told Zawya, adding that this should ensure protection against any shocks in a particular sector or geography.
“We’ve seen a very wide interest in this first ever green sukuk from the region, and first benchmark green sukuk globally,” said Alain Bejjani, CEO of Majid Al Futtaim Holding.
“We’ve had a very interesting mix. We’ve got some institutional investors and we also have a large portion of asset managers. About 67 percent were asset managers and 33 percent were banks,” he added in a telephone call with Zawya.
The green sukuk, which was listed on Nasdaq Dubai on Wednesday, was valued at $600 million with a tenor of ten years.
“We’ve seen a very wide interest coming from the industry at large, not basically any specific sector. That is something that is very important for us because we want to make sure that the financial instrument that we issue has the largest investor base possible, will continue to be well traded, and will be to the largest extent possible immune to what may happen to a certain industry or a certain part of the world,” Bejjani added.
“We were oversubscribed by 5 to 6 times. The book was at above $3 billion and then we closed it at $2.98 billion after tightening (the) spread,” he said.
The sukuk has been priced at 4.638 percent. Interest in it came from all over the world, Bejjani said.
“So we have seen that 38 percent of the investors ended up coming from Asia, 32 percent from the region, 13 percent from Europe, of which about 30 percent from the United Kingdom,” he added.
With this week’s listing, the total amount debt instruments listed by Majid Al Futtaim on Nasdaq Dubai has reached $2.4 billion. In 2015, MAF listed a $500 million sukuk, while in 2013 and 2014, it listed two conventional bonds of $500 million each, and in 2016 it tapped the 2014 bond for a further $300 million.
Towards a ‘greener’ economy
Bejjani said that the green sukuk marks a ‘great’ start for Majid Al Futtaim in green bond issuance, but also in terms of the firm’s efforts to move into a more low carbon, green economy.
On how the proceeds will be used, he said that they will be “invested in projects that are ‘green’ such as in green buildings that we are developing or investing in”.
“We’ll also be investing in energy efficiency projects, as well as water saving projects that will have big social impact and use renewables,” he said.
In 2017, the company launched a strategy to significantly reduce the company’s water consumption and carbon emissions to the extent that it leads to positive corporate footprint by 2040. It now owns around 3 million meters square of green certified floor areas, including the recently-launched ‘My City Centre Masdar’ in Abu Dhabi. (Read more here).
“All of our projects are green, at Majid Al Futtaim we don’t have anything that is not green, so all of our assets are green certified between gold and platinum,” he added.
“We embed sustainability to everything that we are doing, in our buildings but also our businesses,” he said.
On whether there are more green bonds in the pipeline, Bejjani said “We always look at our funding strategies, based on requirements but also opportunities in the market... so be it traditional bonds, sukuk, or green bonds, whenever we see the right opportunity with the right position at the right time, we will definitely do it.”
The company has received credit rating of ‘BBB’ with a stable outlook from Fitch Ratings and Standard & Poor’s for the seventh consecutive year, and the green sukuk achieved the same ‘BBB’ rating both from Fitch Ratings and S&P Global.
On how he sees the adoption of ESG (Environmental,Social, Governance) standards among corporates in the GCC region, Bejjani said: “The fact that we are the first corporate to issue green sukuk in the region speaks to that. I think the level of development of the sustainability commitment and practices as well as corporate governance at Majid Al Futtaim is the most advanced in the region …I hope that other corporate in the GCC will be able to follow suit.”
(Reporting by Nada Al Rifai; Editing by Michael Fahy)
© ZAWYA 2019
