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Saudi Arabia’s PIF raises $5.5bn from sale of second green bond

The fund will allocate an amount equalling the net proceeds of the issuance to fund eligible green projects in line with its Green Finance Framework

by Gulf Business

February 13, 2023

PIF second green bond issue _ pexels-pixabay-356036

Saudi Arabia’s Public Investment Fund (PIF) has raised $5.5bn from its second green bond issuance. The issuance follows the fund’s inaugural green bond in October 2022, the first-ever green bond issued by a sovereign wealth fund, and the first-ever 100-year green bond.

Read: Saudi Arabia’s PIF raises $3bn via inaugural green bond

As with its inaugural bond issuance, PIF will allocate an amount equal to the net proceeds of the issuance to fund eligible green projects in accordance with its Green Finance Framework, which includes projects in the space of renewable energy, energy efficiency, sustainable water management, pollution prevention and control, green buildings and clean transportation.

Key highlights of PIF green bond

The proceeds will help further diversify the fund’s sources of debt funding, in line with its medium-term capital-raising strategy. This latest bond issuance was more than six times oversubscribed, with books exceeding $33bn. It was issued in three tranches, comprising:

$1.75bn (SAR6.56bn, 7 years
$2bn (SAR7.5bn), 12 years
$1.75bn (SAR6.56bn), 30 years

The bond was sold to a wide range of institutional investors globally, including Asia.

Fahad AlSaif, head of Global Capital Finance Division said: “PIF’s second green bond issuance underlines the role that the fund is playing in supporting Saudi Arabia’s green agenda, as well as diversifying the local economy and unlocking new and sustainable sectors. Strong demand from international institutional investors for this second issuance is a testament to the ongoing success of PIF’s capital raising strategy, its credit profile and financial strength.”

In other news, PIF has signed a joint venture agreement with AeroFarms, a US-based sustainable agriculture company. The two entities will establish a company in Riyadh to build and operate indoor vertical farms in Saudi Arabia and the broader Middle East and North Africa region. The first farm in Saudi Arabia, which is expected to be the largest indoor vertical farm in the MENA region, will have an annual production capacity of up to 1.1 million kgs of agricultural crops.

Also read: Saudi’s PIF partners with AeroFarms to build indoor vertical farms across MENA

The partnership is expected to enable sustainable, local sourcing of crops all year round, grown using AeroFarms’ proprietary smart agriculture technology platform. It will optimise the utilisation of natural resources, including water and agricultural lands, with no need for arable land.