Saudi-based BLOMINVEST BANK (BLOMINVEST) has launched the GBP300 million (US$384.09 million) SAED Green UK Fund as its debut endeavor in the UK market. ISFI spoke to Abdullah Alrashoud, CEO and managing director of BLOMINVEST, to learn more about the fund, which Abdullah expects to receive a license from the Saudi Capital Market Authority in the coming month.
“There is big demand from Saudi investors to have some opportunities in the UK … Because of the turbulence in the market, we would like to give our clients something diversified with less risk,” Abdullah told ISFI.
The fund is a multi-asset fund investing in liquid and income-generating assets. The liquid assets will comprise exchange-traded funds (ETFs) which invest in REITs, with the REITs distributed in the UK and the US.
The income-generating portion will see the fund acquire real estate and properties predominantly in the UK. “We will acquire land or projects under construction where we will participate in continuing the development of buildings from scratch,” Abdullah shared.
The five-year fund is a collaborative effort between the bank, SAED Executive Properties and International Investment Gate. With BLOMINVEST as the fund manager, the fund targets institutional investors and high-net-worth individuals.
According to Abdullah, the main reason why the fund is classified as a green fund is because of the regulations and incentives for green properties in the UK.
“The regulations are changing [and] that will give green properties better chances to have higher yields, to have higher occupancies,” Abdullah detailed.
Additionally, Abdullah noted that the current historically low exchange rate for the pound sterling may also prove favorable for Saudi investors if the pound sterling appreciates over the time horizon of the fund.
Since 2018, BLOMINVEST has made several previous attempts to expand to the UK market, with two projects coming very close to being finalized. According to the CEO, COVID-19 contributed to the projects being scrapped.
With the previous UK project attempts, Abdullah shared that should this fund be successful, it will mark the first in a series of UK projects for the investment bank.
According to Abdullah, sustainable investments are an emerging trend in Saudi Arabia. Both the regulatory landscape as well as investor demand are still burgeoning, although he noted that Saudi Vision 2030 will incentivize the sector.
In a market where demand for sustainable investments for the sake of sustainability is low compared to western markets, Abdullah notes that it is the potentially favorable returns that sustainable investments can offer that ultimately drive sustainable investments in the region.
This is an excerpt of an interview with Abdullah Alrashoud, CEO and managing director of BLOMINVEST BANK. To listen to the full conversation, log on to IFN Podcast.