Majid Al Futtaim raises $500m through green sukuk issuance

The company plans to use the proceeds to refinance $800 million bond commitment

Majid Al Futtaim Holding, which operates Dubai's Mall of the Emirates, launched its debut green sukuk in May 2019. Jaime Puebla / The National

Majid Al Futtaim Holding, one of Dubai's biggest private sector companies and the Middle East's largest mall operator, has raised $500 million through a green sukuk, its fourth in about four years, as it continues to diversify its funding base.

The company will use the proceeds to refinance an older $800 million bond commitment, it said on Thursday.

“The issuance of today’s green sukuk is a testament of 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 Ismail, chief executive at Majid Al Futtaim Holding.

“In reaffirming our commitment to green financing, Majid Al Futtaim is able to further our drive to improve long-term profitability while actively contributing to shaping sustainable finance for the Mena region.”

Majid Al Futtaim, launched its debut green sukuk in May 2019 and another in October 2019. It followed the capital market deals with a $1.5 billion sustainability-linked loan in July 2021, becoming the first privately-owned Dubai corporation to borrow through such a facility. The company also raised $1.25 billion through another sustainability-linked loan in September 2022.

Companies across the GCC are looking to green financing to support their growth ambitions as governments in the oil-rich economic bloc push to meet their net-zero commitments.

Earlier this month, Aldar Investment Properties, the real estate management unit of the emirate’s largest listed developer, Aldar Properties, raised $500 million through its debut green sukuk to fund acquisitions and meet its sustainability goals.

The 10-year Sharia-compliant issuance is part of the company’s $2 billion financing programme, in line with the UAE Net Zero by 2050 strategic initiative, it said in a statement at the time.

In February, Saudi Arabia’s Public Investment Fund raised $5.5 billion through the sale of a green bond, as the kingdom’s sovereign wealth continues to finance or refinance its green investments.

The green bond deal was the PIF’s second in the five months after it raised $3 billion in a debut green bond in October last year.

Majid Al Futtaim said its capital market activity reflected the company’s commitment to environmental, social, and governance goals.

The company has “consistently delivered on its ESG principles” through other sustainability linked initiatives, it said.

It also remains on track to meet its target of having a positive water and energy footprint by 2040 and eliminating single-use plastic in all its operations by 2025.

Majid Al Futtaim reported a 4 per cent increase in 2022 earnings as revenue rose despite global economic headwinds and rising inflation.

Earnings before interest, taxes, depreciation and amortisation for the 12 months to the end of December climbed to Dh4.1 billion ($1.12 billion).

Revenue climbed 12 per cent on an annual basis to Dh36.3 billion, the company said in March.