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HSBC leads in landmark green transaction

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With HSBC as sole green structuring adviser, Majid Al Futtaim issued the world’s first benchmark-size Green Sukuk by a corporate.

Since 1992, UAE-based lifestyle conglomerate Majid Al Futtaim has been a trendsetter in retail, leisure and entertainment, and a leader with regards to sustainability in its region. With its ground-breaking US$600 million, 10-year Green Sukuk, issued from the Middle East and North Africa (MENA), the group has just notched up another world first.

Majid Al Futtaim’s Chief Sustainability Officer, Ibrahim Al-Zu’bi, credits the group’s success to its focus on green issues, with a commitment to be net positive in energy and water consumption by 2040. “It’s ambitious, it’s bold, no one’s done it in the region, but someone should,” he declared.

This progressive approach is also reflected in the way the conglomerate operates in the finance markets, according to John Arentz, Majid Al Futtaim’s Head of Treasury. Adopting the UK Corporate Governance Code for publicly listed companies has reassured investors with a high standard of accountability and transparency, and given Majid Al Futtaim access to capital markets since 2012.

With HSBC’s global expertise in sustainable finance, Majid Al Futtaim has issued the world’s first benchmark Islamic green corporate bond, with strong demand from investors keen to see more issuances from the region covering environmental, social and governance standards (ESG).

“From that respect, where we stand as an organisation is fairly much second to none in this part of the world, and we’re getting a good clap on the back from investors,” said Arentz. “We had over US$2.5 billion worth of green buildings that would meet the criteria. It was a no-brainer for us to go ahead and issue a Green Sukuk.”

Reflecting the bank’s superior structuring capabilities, HSBC was the sole green structuring adviser for the deal, and acted additionally as joint global coordinator, joint lead manager and joint book runner.

HSBC’s long track record in the green bond space was demonstrated as it assisted Majid Al Futtaim in developing its Green Finance Framework to reflect the company’s sustainability policies, while also aligning it with the green bond principles set out by the International Capital Market Association.

Leveraging HSBC’s wide global footprint, a series of fixed income investor meetings in Singapore, Hong Kong, Paris and London allowed Majid Al Futtaim to showcase its rationale for the green issuance. This was key to securing strong demand for the landmark offering from around 170 investors, generating an order book that peaked at US$3bn before closing at US$2.8bn. Majid Al Futtaim has said that it will use the capital raised to finance or refinance eligible projects, which include green buildings, energy efficiency, sustainable water management and renewable energy.

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