Leading international law firm Clifford Chance has advised the Joint Lead Managers on the issuance of a US$500 million inaugural green sukuk by Aldar Investment Properties (AIP), the largest real estate management company in Abu Dhabi and subsidiary of Aldar Properties PJSC (Aldar).

The 10-year sukuk was priced with a 4.875% profit rate with amongst the highest price tightening of any corporate issuance in 2023. The effective funding cost for AIP will be significantly lower due to a successful pre-hedging strategy implemented in 2021 and 2022 when long-term rates were materially lower. As a result, the forward starting swaps secured will reduce the issuance’s effective rate to 3.85%. Following a global investor roadshow, the issuance was four times oversubscribed, attracting a range of local, regional and international investors that placed total orders of over US$2.3 billion.

The issuance forms part of a US$2 billion financing programme by AIP to support its growth agenda and sustainability commitments, in line with the goals of the Paris Agreement, the UAE Net Zero by 2050 Strategic Initiative and Aldar’s plan to be a net zero carbon business by 2050. The sukuk proceeds will be deployed in accordance with Aldar’s Green Finance Framework, which governs investment in sustainable projects such as green buildings, property upgrades to enhance energy efficiency, sustainable water management, pollution control measures, and renewable energy sources.

Aldar has adopted a green financing framework, which aligns with the United Nations Sustainable Development Goals and is based on principles set out by the International Capital Markets Association (ICMA) and the Loan Market Association. The framework sets out criteria for use of proceeds and is governed by Aldar’s Sustainability Council, which comprises senior management and is chaired by Aldar’s Group Director of Sustainability and CSR. Furthermore, in accordance with industry best practice, Aldar has obtained a ‘Second Party Opinion’ from Sustainalytics to externally verify the sustainability quality of the Framework and its alignment with Green Finance Principles.

Clifford Chance’s team comprised partner and Head of Middle East Capital Markets, Stuart Ure (Dubai), Julian Walley (Senior Associate, Dubai), Shauaib Mirza (Consultant, Dubai) and Nader Koudsi (Associate, Dubai).

Stuart Ure commented: “We are delighted to have supported AIP and its investment banks on AIP’s inaugural issuance of green sukuk – the success of the transaction further demonstrates that the sector continues to develop apace with investors placing increasing importance on environmental, social and governance investment activities.”

HSBC and Standard Chartered Bank were joint global coordinators on the issuance, along with Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank and Mashreqbank psc (acting through its Islamic Banking Division), as joint lead managers and joint bookrunners.

Consistently ranked Band 1 in legal directories, Clifford Chance was awarded 15 awards at the Bonds, Loans & Sukuk Awards 2023 and was named Banking Legal Adviser of the Year at the Bonds, Loans & Sukuk Middle East Awards 2022, International Law Firm of the Year (Middle East) at the Middle East Legal Awards 2023 and Middle East International Law Firm of the Year at the Chambers Middle East Awards 2021.