Tabreed Raises USD 700M Through First Green Sukuk Issuance Under USD 1.5 Billion Programme to Fund Sustainable District Cooling Projects, Highlighting Strong Investor Demand and Commitment to Sustainability.
Tabreed Raises USD 700M Through First Green Sukuk
Tabreed, the world’s leading district cooling company, successfully raised USD 700 million through its inaugural five-year green Sukuk issuance, the first under its USD 1.5 billion trust certificate programme. The Sukuk was oversubscribed by 2.6 times, reflecting strong investor confidence in Tabreed’s robust financial fundamentals and sustainability credentials. The proceeds will finance projects aligned with the company’s Green Financing Framework, focusing on energy efficiency, wastewater management, and sustainability.
Introduction
Tabreed, a leading district cooling company based in the UAE, has recently completed the issuance of its inaugural green Sukuk under a USD 1.5 billion trust certificate issuance program. The successful issuance of USD 700 million marks a significant milestone for the company, reinforcing its position as a pioneer in the global Sukuk market. With over two decades of experience in Sukuk issuances, Tabreed continues to innovate in the sustainable finance sector by aligning its operations with green principles. This issuance, which will be listed on the London Stock Exchange's International Securities Market, demonstrates Tabreed's commitment to sustainability, operational excellence, and its ability to attract strong investor demand.
The green Sukuk proceeds will support the company’s mission of financing or refinancing projects in line with its Green Financing Framework. This framework aims to back eligible green projects, focusing on the core business of district cooling systems, energy and water efficiency, and wastewater management. The issuance was oversubscribed by nearly 2.6 times, showing strong investor confidence in Tabreed’s financial stability and sustainability credentials.
Market Trend and Overview of Sukuk
The market for green finance, especially green Sukuk, has been growing rapidly in recent years as businesses and investors focus more on sustainability. Green Sukuk is becoming an attractive financing tool, especially for companies with environmentally-conscious projects that aim to reduce carbon emissions or improve resource efficiency. The global market for green bonds, including Sukuk, has experienced significant growth, driven by increasing demand from institutional investors who prioritize Environmental, Social, and Governance (ESG) criteria.
Tabreed’s green Sukuk issuance is timely, as it coincides with the increasing trend of Middle Eastern companies adopting green financing methods. The success of this issuance highlights the importance of green Sukuk in helping companies meet their sustainability goals, and it sets a precedent for future projects in the region. The global trend towards ESG investing is also being fueled by increasing regulatory pressure, growing awareness of climate change, and the shift towards net-zero emissions goals.
The issuance of green Sukuk is expected to continue growing, as countries and corporations look for sustainable ways to finance projects that contribute to environmental goals. Tabreed’s first green Sukuk issuance also reflects a broader trend where companies are integrating sustainability into their financial strategies, offering attractive investment opportunities in a market that is increasingly focused on environmental and social responsibility.
Background of Tabreed
Tabreed, the UAE’s leading district cooling provider, has a longstanding history of innovation and growth in the energy sector. Founded with the aim of providing energy-efficient cooling solutions for large-scale developments, Tabreed operates 92 district cooling plants in six countries, serving a wide range of commercial, residential, and industrial customers. The company has been a pioneer in using district cooling as a sustainable alternative to traditional air conditioning systems, significantly reducing energy consumption and carbon emissions.
Tabreed’s commitment to sustainability is evident through its focus on energy-efficient cooling solutions, which use approximately 50% less electricity than conventional cooling systems. In line with its growth strategy, Tabreed has consistently issued Sukuk as a means of raising capital for expansion and development. The latest green Sukuk issuance is a continuation of this approach, with proceeds dedicated to supporting projects that align with the company’s Green Financing Framework.
Tabreed’s long history in the Sukuk market dates back to 2006 when it became the first corporate entity in the Middle East to issue a rated Sukuk. This milestone was followed by other successful issuances, establishing Tabreed as a trusted name in the Sukuk market. Its latest green Sukuk issuance highlights Tabreed’s ongoing commitment to sustainable financing practices and its leadership in promoting green solutions in the region.
Mission and Vision
Tabreed’s mission is to provide innovative and sustainable cooling solutions that contribute to energy efficiency and environmental sustainability. By offering district cooling services, Tabreed plays a critical role in reducing energy consumption and carbon emissions, aligning its operations with the UAE’s goals for net-zero emissions.
Tabreed’s vision is to be a global leader in sustainable energy solutions, driving the transition to a more energy-efficient and environmentally responsible world. The company seeks to continuously innovate and expand its portfolio of sustainable projects, creating long-term value for its stakeholders while addressing the challenges of climate change. Tabreed is committed to improving the quality of life for communities while delivering strong financial performance and maintaining the highest standards of corporate governance.
Through its Green Financing Framework, Tabreed aims to facilitate the financing of projects that contribute to environmental protection, including the construction and operation of energy-efficient cooling systems and projects related to water conservation and wastewater management. The company’s vision is aligned with global sustainability trends and the growing demand for green finance.
Core Values and Culture
Tabreed’s core values revolve around sustainability, innovation, and excellence. The company fosters a culture of operational excellence, environmental responsibility, and strong corporate governance. These values are embedded in every aspect of its business, from its technological innovations in district cooling to its commitment to reducing the carbon footprint of its operations.
Tabreed places a high emphasis on sustainability, not just in its products but also in its business practices. This is reflected in its Green Financing Framework, which ensures that the company’s projects meet rigorous environmental standards. The company’s culture is built on the principles of integrity, transparency, and accountability, ensuring that it maintains strong relationships with stakeholders, including investors, customers, and regulatory bodies.
Tabreed’s workforce is diverse, skilled, and passionate about delivering cutting-edge energy-efficient solutions. The company encourages continuous learning and development, ensuring that its employees are well-equipped to drive the company’s mission forward. Tabreed also prioritizes social responsibility, contributing to the communities in which it operates and promoting sustainable practices across all levels of the organization.
Industry Context
The district cooling industry is an essential component of the UAE’s energy landscape, particularly in urban areas where cooling demand is high. As the region continues to grow, the demand for energy-efficient cooling solutions is expected to increase. District cooling provides an environmentally friendly alternative to conventional air conditioning, helping reduce the overall energy consumption of buildings and mitigating the effects of climate change.
Tabreed’s role in the industry is crucial, as it provides reliable and efficient cooling services to major developments, including residential, commercial, and industrial sectors. The company’s focus on sustainability aligns with the UAE’s broader energy strategy, which aims to reduce carbon emissions and increase the share of renewable energy in the country’s energy mix.
The district cooling industry is also influenced by global trends in energy efficiency and sustainability, with growing demand for green financing solutions. As companies increasingly focus on ESG criteria, there is a rising need for innovative financing options like green Sukuk to support projects that contribute to environmental goals. Tabreed’s green Sukuk issuance positions the company at the forefront of this global trend, reflecting its leadership in sustainable energy solutions.
Market Size and Scope
The global market for district cooling is growing rapidly, driven by increasing urbanization, energy efficiency requirements, and environmental sustainability goals. The Middle East, particularly the UAE, is one of the largest markets for district cooling, with significant demand from major developments and real estate projects. Tabreed’s market presence in six countries, including the UAE, Bahrain, Oman, and Qatar, positions it as a regional leader in the district cooling industry.
The market for green Sukuk, which Tabreed is tapping into, is also expanding, with increasing investor appetite for sustainable investments. Green Sukuk issuance is expected to continue growing as more companies seek to finance environmentally-friendly projects. Tabreed’s successful issuance of USD 700 million in green Sukuk reflects the growing market demand for such instruments and the company’s ability to attract investors from around the globe.
As the global market for green finance expands, Tabreed is well-positioned to continue leading the charge in financing sustainable projects. Its Green Financing Framework provides a clear roadmap for supporting green initiatives, and its strong financial standing ensures that the company remains competitive in a growing and evolving market.
Market Trend
The market for green finance, particularly Sukuk, is witnessing significant growth as both institutional investors and companies increasingly focus on sustainability. With rising awareness about climate change and the shift toward net-zero emissions, investors are seeking opportunities that align with their ESG criteria. Green Sukuk, as a form of Islamic finance, offers an effective tool for financing projects that contribute to environmental goals while adhering to Sharia principles.
In the UAE and the broader GCC region, there is a growing trend towards sustainable finance, with both government and private sector players prioritizing green projects. Tabreed’s successful green Sukuk issuance is a reflection of this broader trend, highlighting the demand for financing instruments that support sustainable infrastructure development. As governments and corporations continue to adopt green policies, the market for green Sukuk is expected to expand further, with more issuers entering the space to meet investor demand for ESG-compliant investments.
Funding Milestone
The issuance of USD 700 million via the green Sukuk marks a major funding milestone for Tabreed. The proceeds from this issuance will support the company’s growth strategy and its commitment to sustainability. By issuing green Sukuk, Tabreed not only raises capital for its expansion projects but also strengthens its ESG credentials, attracting investors who prioritize sustainability.
This issuance is part of a larger USD 1.5 billion Sukuk programme, which reflects Tabreed’s long-term vision for growth and sustainability. The funds raised through the green Sukuk will be used to finance projects that align with Tabreed’s Green Financing Framework, contributing to the company’s mission of reducing carbon emissions and promoting energy efficiency.
Key Achievements
Tabreed’s key achievements include:
- Pioneering Role in Sukuk Issuance: Tabreed was the first corporate issuer of Sukuk in the Middle East in 2006, setting a precedent for others to follow.
- Sustainability Leadership: Tabreed’s district cooling systems use approximately 50% less electricity than conventional air conditioning, helping to reduce carbon emissions.
- Investor Confidence: The successful issuance of green Sukuk, oversubscribed by 2.6 times, demonstrates strong investor confidence in Tabreed’s financial stability and sustainability credentials.
- ESG Milestone: Tabreed became the first district energy company to achieve the Verified Carbon Standard, allowing it to trade carbon credits in the voluntary market.
Tabreed’s continued success in the Sukuk market and its focus on sustainability position it as a leader in both the district cooling industry and the green finance sector.
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