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Thursday, May 30, 2024

Launch Partners

Case study: Aldar’s Islamic sustainability-linked financing facility

Aldar Properties (Aldar) secured a sustainability-linked financing agreement worth AED1 billion (US$272.22 million) from Abu Dhabi Islamic Bank (ADIB) on the 13th December 2023. The sustainability-linked financing, which is to be channeled toward sustainable projects under its Green Finance Framework, brings Aldar’s total ESG financing to AED4.8 billion (US$1.31 billion).

“The banks in our market remain highly liquid — with healthy credit conditions supported by the UAE’s robust macro fundamentals — providing attractive funding opportunities for Aldar.

Pricing was indeed a consideration as well as developing new relationships,” Faisal Falaknaz, the group chief financial and sustainability officer at Aldar, told ISFI, detailing why it tapped the banking sector for financing so closely following the issuance of its debut US$500 million green Sukuk in May 2023.

The Ijarah-based sustainability-linked financing facility sees Aldar commit to three key performance indicator (KPI) targets, namely worker welfare; Leadership in Energy and Environmental Design gold building certification for its real estate properties; and energy efficiency across its existing assets and development projects, Faisal shared.

Failure to meet these target KPIs for the Islamic covered drawing facility would require Aldar to pay a sustainability premium, Faisal explained.

Last year saw Aldar secure considerable funding. In addition to its debut green Sukuk, it also signed an additional AED2 billion (US$544.44 million) in new facilities, which will support its future growth and investment.

Notably, Aldar Investment Properties, Aldar’s asset management arm, secured a AED500 million (US$136.11 million) conventional sustainability target-linked term loan in June last year from Mashreq Bank. The facility has yet to be utilized according to its financial statements for the period ended the 30th September 2023.

“We also secured a non-Islamic AED1 billion sustainability-linked loan with Abu Dhabi Commercial Bank at the end of 2023, which followed the AED300 million (US$81.67 million) five-year HSBC facility that we secured in 2021 and an AED500 million Standard Chartered facility in 2022,” Faisal shared.

Aldar –ADIB Sustainable Finance Facility

AED1 billion (US$272.22 million)


13th December 2023
Summary of terms and conditions
Aggregate principal amount
AED1 billion (US$272.22 million)
Type of facility
Unsecured revolving credit facility
Structure
Ijarah
Use of proceeds
General corporate purposes
Tenor
Five years
Profit rate/ yield
Not disclosed
Legal advisor
Clifford Chance on behalf of Aldar, Dentons on behalf of Abu Dhabi Islamic Bank
Governing law
Abu Dhabi law
  • Companies in the Article
  • Aldar

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