Dubai-based conglomerate Majid Al Futtaim said on Thursday it had signed its inaugural $1.5 billion (Dh5.51 billion) Sustainability-Linked Loan (SLL), a financial instrument secured primarily on environmental, social and governance (ESG) related performance.
A landmark transaction makes Majid Al Futtaim the first privately-owned Dubai corporation to borrow via SLL type of innovative facility, the leading the leading shopping malls, retail and leisure giant said in a statement.
The SLL is the first and only "penalty-only" loan structure in the region, with clear targets for each year of the loan. Standard Chartered Bank acted as sustainability coordinator on the loan
The SLL aims to facilitate and support environmentally and socially sustainable economic activity and growth by incentivising ambitious, predetermined sustainability performance objectives in line with Majid Al Futtaim's sustainability strategy.
The five-year SLL is structured as a revolving credit facility (RCF) and is the largest corporate, non-government-linked SLL in the region and the largest in the Mena real estate sector, with over a dozen banks participating in the syndicate.
The agreement also includes a gender diversity target for women to constitute 30 per cent of board members and senior management roles, aligning with the global aims of the 30 per cent Club, a first for the region.
Ziad Chalhoub, chief financial officer, Majid Al Futtaim Holding, said the signing of the group’s first SLL comes as a result of, and in line with, its long-term strategic targets, including the production of more energy and water than consumed, reaching a net positive business model by 2040.
"Majid Al Futtaim continually strives to become one of the most sustainably considerate companies in the world, and this extends to genuine accountability in how we finance our operational and capital expenditures across the group. While a company’s profitability is important,, how you contribute to sustainability is becoming more crucial and a filter for investors to decide how much and where they will invest. To ensure that you have access to funding – and at attractive rates – in a world where sustainability is becoming more important, it is imperative to embrace this reality now and not be left behind,” said Chalhoub.
One of Majid Al Futtaim’s core ambitions as part of this SLL is to have all its malls certified LEED Gold (Leadership in Energy and Environmental Design is a green building certification programme used worldwide) or better, which would be another first for the region. It is worth noting that Majid Al Futtaim Properties' hotels were the region's first to receive LEED Platinum certification across its 13-hotel property portfolio earlier this year.
Mohamed Salama, regional head of Client Coverage Mena, Standard Chartered Bank, said the bank is delighted to support Majid Al Futtaim in their landmark debut sustainability linked loan by acting as sole sustainability coordinator.
“Having structured the first-ever loan in the Middle East to incorporate sustainability-linked pricing in 2018, we are proud to have brought another pioneering facility to the market. As a regional leader in sustainable finance and given our own commitment to be net zero across all our activities by 2050, we are committed to supporting our clients, like Majid Al Futtaim, to deliver on their sustainability objectives by structuring innovative solutions,” he said.
There has been a remarkable increase in the volume of SLLs globally following the launch of the Sustainability-Linked Loan Principles (SLLP) in March 2019, published to promote the development of SLL products by providing a framework for application by lenders and borrowers.
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