UAE’s Masdar likely to issue new green bond in 2025, says finance chief

Abu Dhabi clean energy company Masdar will probably issue its third green bond next year as it raises funds to support its global renewables projects, its chief financial officer has said.

The next issuance will “most likely” occur in 2025, Mazin Khan told The National, without revealing further details.

“The exact size … will be dependent on the pipeline [of projects], but it would not be too different from what we've already done in the past,” he said. “We have a significant pipeline of new renewable energy projects, which we'll be looking to fund through our green bonds.”

In July, Masdar said it raised $1 billion through its second green bond issuance, under its green finance framework. Last year, the company raised $750 million through a green bond offering and listed it on the London Stock Exchange and the Abu Dhabi Securities Exchange as part of a $3 billion bonds programme to finance clean energy projects in the UAE and other countries.

Mr Khan said that green bonds will remain pivotal to Masdar's future funding strategy, but the company is also evaluating other financing options.

“In terms of our funding strategy, we basically have our green bonds … and then we have the funding from the shareholders, which effectively we use to close some of these [mergers and acquisitions] transactions for the time being. That's what we expect to do in the near future,” he said. “But again, we continue to evaluate all sorts of financing options, and we're not closing the door on anything.”

The market for green and sustainable bonds and sukuk is booming, particularly in the GCC as governments in the oil-rich economic bloc push to meet their net-zero commitments. Last year, UAE-based companies such as Aldar Properties, Abu Dhabi Islamic Bank and Abu Dhabi Commercial Bank raised money through the issuance of green bonds.

Masdar, which aims to expand its capacity to at least 100 gigawatts of renewable energy by the end of the decade, has been on an investment spree in recent quarters.

Several of the company’s recent acquisitions have been in the US and the EU. Both regions have introduced green policies meant to hasten the transition to renewable energy.

The US has enacted the Inflation Reduction Act, which offers a series of tax incentives on wind, solar, hydropower and other renewables, as well as a push towards electric vehicle ownership.

The EU’s REPowerEU plan, introduced two years ago, aims to increase the share of renewable energy in the bloc’s gross final consumption to 45 per cent by 2030, up from a previous target of 40 per cent.

‘’These regulations help facilitate that transition to effectively net zero,” Mr Khan said. “And what these regulations, laws and regulations do is they create that environment [and] demand. We definitely take them into account when evaluating our investments.”

On Tuesday, Masdar closed its acquisition of a 50 per cent stake in Terra-Gen, one of the largest independent renewable energy producers in the US, from private equity firm Energy Capital Partners.

Last week, the company signed definitive agreements with Brookfield Renewable and its institutional partners to fully acquire Spanish renewable energy company Saeta Yield. Masdar is investing Dh2.8 billion ($762.4 million) in the Saeta deal, which has an implied enterprise value of $1.3 billion, with the transaction expected to close towards the end of this year.

“One of the things that we are looking to do is not just acquire for the sake of acquiring,” Mr Khan said. “One of the key criteria that we're looking at is how we can then use those acquisitions as a growth factor within that region.”