Masdar Raises $1Billion with Green Bond

  • Masdar said its second green bond issuance on the London Stock Exchange raised $1 billion.
  • Masdar receives funding from the United Arab Emirates sovereign wealth fund Mubadala, its power and water utility Taqa, and its oil company Adnoc.

Masdar said its second green bond issuance on the London Stock Exchange had raised $1 billion, the latest sign of Gulf states’ strategic diversification into renewable energy.

Five times oversubscribed issuance is part of a larger initiative through which Masdar aims to raise up to $3bn from the bond market to deploy 100 gigawatts of renewable energy capacity by 2030.

Masdar, also known as Abu Dhabi Future Energy Co, has amassed a portfolio of projects that are either operational, under construction, or development worth more than $30bn.

 Masdar says the new bond proceeds will go “exclusively to new greenfield renewable energy projects.” Chief financial officer Mazin Khan stated, “Every dollar is going towards developing a new renewable energy project.” This contrasts with other issuers who may “take proceeds from green bonds and use them in M&A or acquisitions of existing projects, which are not making a difference.”

 Masdar receives funding from the United Arab Emirates sovereign wealth fund Mubadala, its power and water utility Taqa, and its oil company Adnoc.

Last month, it bought Greece’s biggest renewables company, Terna Energy, in a €3.2bn ($3.4bn) deal and has said it is on the hunt for more acquisitions. After hosting last year’s COP28 climate summit, the UAE launched Altérra, a $30bn climate-related investment fund that says it aims to catalyze $250bn of investment for “climate change action.”

 Saudi Arabia’s sovereign wealth fund PIF started issuing green debt in 2022, and the Saudi government itself, which unveiled a green financing framework this year, may soon begin selling green bonds. Asked whether Masdar’s petrostate backing threatens the credibility of its green bond issuance, Khan pointed to the UAE’s record as a major global investor in renewables.

“The UAE is continuing to invest quite heavily in the transition.” Proceeds from a $750mn green bond Masdar issued a year ago have been used to finance five Uzbekistan projects, one Azerbaijan, and a 1,800MW project in the UAE.

This week’s issuance would also finance projects in the UAE, Khan said, and in Germany, where Masdar recently co-invested in an offshore wind farm in the Baltic Sea. Overall, Khan said, the green bond programme represented “a success story for investing in the global south” — although Masdar has not used proceeds from its prior green bond issuance for investments in countries in the southern hemisphere.

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