UAE’s Majid Al Futtaim issues $500m green sukuk

Dubai-based property and retail conglomerate Majid Al Futtaim (MAF) has raised $500m through a 10-year dollar-denominated green sukuk, as investor demand and favourable conditions drive issues from the GCC region.

The conglomerate will use the proceeds from its fourth green sukuk issuance to refinance an older $800m bond commitment due in May 2024.

With its inaugural green sukuk or Islamic bonds issuance in May 2019, MAF introduced sustainable financing in the region, setting the stage for subsequent successful offerings.

MAF has demonstrated a prudent preference for sustainability-linked funding since its debut green sukuk. The company issued the second green sukuk in October 2019, which was followed by a $1.5bn sustainability-linked loan (SLL) in July 2021.

The shopping mall operator was the first Dubai-based privately-owned company to borrow through an SLL facility and continues to be the region’s only ‘penalty-only’ borrower. The company’s second SLL was closed in September 2022 for $1.25bn.

“The issuance of today’s green sukuk, is a testament to the global investment community’s continued confidence and robust support in our company, the sustainability of our debt portfolio and the inherent strength of our long-term strategic focus,” said Ahmed Galal Ismail, CEO at MAF.

“Majid Al Futtaim can further our drive to improve long-term profitability while actively contributing to shaping sustainable finance for the MENA region.”

The group is on track to meet its pledge to achieve a positive water and energy footprint by 2040 as well as eliminate single-use plastic in all its operations by 2025. MAF annual revenues rose by 12 per cent year-on-year (YoY) to Dhs36.3bn while earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 4 per cent YoY to Dhs4.1bn, driven by the group’s operational performance and investments in digital transformation and data analytics.

Founded in 1992, MAF is a diversified lifestyle conglomerate with operations in 16 markets across the Middle East, Africa and Asia.

Banque Saudi Fransi’s $900m sukuk

In other news, Banque Saudi Fransi issued a five-year $900m dollar-denominated sukuk with an annual return of 4.75 per cent under the trust certificates issuance program.

The bank said that the certificates would be listed on the International Securities Market of the London Stock Exchange and sold in keeping with Regulations of the US Securities Act 1933.

The bank appointed seven local and international banks to manage its sukuk issuance including Citigroup, First Abu Dhabi Bank, Goldman Sachs, HSBC Bank and Mizuho International.

Moody’s projected that cross-border corporate sukuk issuance will grow significantly this year from 2022 lows, with companies in the GCC region and Malaysia expected to account for most of the issuances.

“Year-to-date cross-border issuance as of May 19, 2023, was $5.2bn, around double the issuance volume in full-year 2022 and will likely grow further,” said Moody’s.

Read: Aldar Investment Properties raises $500m from inaugural green sukuk