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Saturday, May 25, 2024

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ACCIONA’s green financing: A first on many fronts

Water development and sustainable infrastructure company ACCIONA has successfully secured green loans and financing facilities worth a total of US$480 million from a group of participating banks that includes three Islamic banks from the GCC region.

Funds from the deal are allocated for the construction of three independent sewage treatment plants (ISTPs), namely Madinah-3, Buraydah-2 and Tabuk-2, that are located in Saudi Arabia. The plants are being developed by ACCIONA with its local partners Tawzea and Tamasuk, a Saudi infrastructure development and investment company.

The syndicated transaction will also finance expenditures related to the three sewage plants’ wastewater treatment projects, which include the recycling of wastewater for agricultural activities, the treatment and reuse of sewage sludge for agricultural use and the use of renewable electricity to power the plants.

The green financing deal, which is ACCIONA’s first green loan and first Islamic financing for its water projects, is financed by Abu Dhabi Islamic Bank (ADIB), MUFG, Alinma Bank, Riyad Bank and Siemens Bank.

The transaction also marks ADIB’s first green finance deal in Saudi Arabia. The bank had acted as the mandated lead arranger, hedge provider and Islamic finance agent for the deal, and also provided US$61 million for the Shariah tranche.

The Shariah financing structure used for the Islamic tranche, which makes up 60% of the total value of the loans and facilities provided by the participating banks, is Ijarah. S&P Global Ratings certified the total financing for the three projects as green, in compliance with best practices.

“Investors and financial institutions are increasingly allocating larger volumes of capital to green infrastructure projects, with a clear focus on water projects. The Madinah-3, Buraydah-2 and Tabuk-2 ISTPs are just the latest examples of this rapidly growing global trend,” Tamasuk said.

Mike Davis, the head of wholesale banking at ADIB, noted: “The financing of these projects is an important part of the development of Saudi Arabia’s environmentally friendly infrastructure. In line with our vision of being a leading innovative Islamic bank, we strive to create a positive impact on society by supporting projects that incorporate environmental, social and governance criteria. We are delighted to be empowering key sectors in the GCC to grow and become more sustainable through impactful finance solutions and achieving their sustainability targets.”

Construction on all three projects will occur simultaneously and, once completed, treat the wastewater of up to two million inhabitants in three different cities in Saudi Arabia, initially delivering 440,000 m3 per day of high-quality treated wastewater for irrigation and landscaping.

ACCIONA’s green facility
US$480 million
ACCIONAMarch 2022
Aggregate principal amountUS$480 million
Islamic trancheUS$61 million, or 60% of the total
Use of proceedsTo finance expenditures related to the wastewater treatment projects of three independent plants
Participating banksAbu Dhabi Islamic Bank; MUFG; Alinma Bank; Riyad Bank; Siemens Bank

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