KSA’s Public Investment Fund raises USD 5.5 bn in second green bond issuance

Good morning, wonderful people. We’re back from the weekend with a packed issue full of regional updates in green finance, renewables projects, and a couple of M&A transactions to round it all out.

THE BIG CLIMATE STORY- It’s been a busy week for Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, having completed both a USD 5.5 bn green bond issuance and a 30% acquisition stake of Saudi Tabreed. We have chapter and verse on these stories and more in the news well below.

THE BIG CLIMATE STORY OUTSIDE THE REGION-

Biden and Brazil’s Lula talk climate action in DC meeting after four years of “self marginalization”: Climate cooperation was high on the agenda in a meeting between US President Joe Biden and newly-elected Brazilian President Luiz Inacio Lula da Silva in Washington DC on Friday. The US administration pledged to work with Congress to provide “initial support” to protect the Amazon rainforest, in a joint statement released after the meeting. This could see the US donate an initial USD 50 mn to Brazil’s Amazon Fund, which aims to fight deforestation and support sustainable development projects.

Lula continues to position himself as the climate champion to Bolsonaro’s climate villain: The Amazon Fund, set up in 2009, has been rebooted by Lula — with the support of Norway and Germany — after being frozen by former Brazilian President Jair Bolsonaro in 2019. Deforestation hit a 15-year high under Bolsonaro, who eased environmental protection to spur mining and logging in the Amazon — which he said would boost economic development. Lula’s administration has recently begun a crackdown against illegal gold mining in the rainforest. The Amazon was “invaded” under Bolsonaro, Lula said on Friday, noting his commitment to reach zero deforestation by 2030 and saying that he and Biden should work together to tackle climate change and inequality.

The story is attracting coverage in the international press: Reuters | CNN | Washington Post | Reuters

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HAPPENING TODAY- There are a number of events starting today:

• The Egypt Petroleum Show will kick off under the theme “Supporting Sustainable Global Energy Supply and Demand,” hosting talks on sustainable development, how climate change impacts oil and gas production, and decarbonization for net zero targets.
• The UAE’s International Conference on Effective Nuclear and Radiation Regulatory Systems will begin, tabling discussions on improving the effectiveness of nuclear and radiation regulatory systems and building resilience and agility in response to emerging challenges.
• Elon Musk is set to make an appearance at the World Government Summit in Dubai, The National reports. Heads of state — including Egypt’s Abdel Fattah El-Sisi and Turkey’s Recep Tayyip Erdoğan — join policymakers and tech tycoons like Musk to discuss pathways to reshaping governments to adapt to climate change, growing population levels, and the rise of AI in the workplace. Musk is set to discuss global trends with the UAE’s Cabinet Affairs Minister Mohammed Al Gergawi during the summit — which will run through to this Wednesday, 15 February.

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WATCH THIS SPACE #1- Institutional investors support lawsuit accusing Shell of climate risk mismanagement: A group of institutional investors with a collective USD 543 bn assets under management is giving its support to a first-of-its-kind London lawsuit against oil giant Shell’s board over mismanagement of climate-related risks, Reuters reported. The lawsuit — brought by ClientEarth, an environmental law charity and activist Shell investor — accuses the energy behemoth’s directors of breaking company law by failing to manage the “material and foreseeable” risks posed by climate change. Shell has rejected the allegations, Reuters notes.

Who supports the lawsuit? Institutional investors who collectively own some 12 mn of Shell’s 7 bn shares — including British pension funds London CIV and nest, Swedish pension fund AP3, French asset manager Sanso IS, Belgium’s Degroof Petercam Asset Management, and Denmark’s Denmark's Danske Bank Asset Management and Danica Pension and AP Pension — are all said to have written in support of the lawsuit.

WATCH THIS SPACE #2- Tesla CEO Elon Musk will reveal part 3 of the EV company’s “Master Plan” during its first investor day on 1 March, Musk said in a tweet. The third part of Musk’s “Master Plan” will address scaling car production, battery material and components, Reuters notes him saying previously. Tesla is expected to unveil information on plans to produce a vehicle of about half the cost of what’s currently on offer, as well as long-term expansion plans and capital allocation at the investor day.

WATCH THIS SPACE #3 – An anticipated bleak outcome for the UN’s first Global Stocktake (GST) could force investors to ramp up decarbonization efforts, Reuters reported. The GST — due to be released before COP28 kicks off in late November — was set up as a five-year yearly review of progress under the Paris agreement, and most analysts predict it will report that global efforts are far from what is required to stay within the 1.5°C target. COP28 President Sultan Al Jaber appeared to echo these predictions last month in a sustainability conference saying “we don’t need to wait for the stocktake to know what it will say. We are way off-track,” the newswire adds.

WATCH THIS SPACE #4 – Morocco is among several African countries in talks with FSD Africa for transactional guidance on a potential green bond issuance, Bloomberg reported. The development agency — backed by the UK’s Foreign Office — will help African countries raise at least USD 400 mn for climate-related projects this year with some expected to be issued by 2Q 2023, the business information service quotes FSD Africa Capital Markets Director Evans Osano as saying.

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PSA- The Emirates Water and Electricity Company (EWEC) 1Q 2023 clean energy certificates auction is open and will close tomorrow, according to a statement. The exclusive vendor of nuclear and solar-produced electricity in the UAE is selling digital certificates to certify the source of renewable energy usage and allow companies to back up ESG goals. EWEC’s 4Q 2022 auction sold big with over 9 mn units sold last December.

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CLIMATE DIPLOMACY- Egypt’s El Sisi, Greece’s Mitsotakis talk interconnection project progress: Egypt’s President Abdel Fattah El Sisi and Greek Prime Minister Kyriakos Mitsotakis discussed the progress of the 3 GW Greece-Egypt Interconnector (GREGY) in a phone call on Friday, according to a Greek presidency statement. El Sisi also met with the head of Greek infrastructure investor Copelouzos Group — which is leading the project — in Egypt on Saturday, according to an Egyptian presidency statement.

Background: Announced in June last year, the planned EUR 3.5 bn interconnector will run almost 1.5k km from Egypt’s Wadi El Natroun directly across the Mediterranean to mainland Greece, transmitting only renewable energy generated in Egypt. Work on the project accelerated last year as the EU upped its search for new energy sources amid a European energy crisis spurred by the Russia-Ukraine war. The consortium working on GREGY is close to finalizing technical and financial surveys ahead of a financial investment decision on the project, a senior figure at Copelouzos said last week.

Grid interconnection with MENA is all the rage: Egypt signed a cooperation framework with Greece and Cyprus for the USD 4 bn, 2 GW EuroAfrica Interconnector in 2019. And Morocco has for some time been exporting electricity generated from solar and wind energy to Spain and Portugal through two electricity interconnection projects with a combined generation capacity of 1.4 GW. Morocco is also working on a 10.5 GW solar, wind, and storage complex that could see it export around 3.6 GW of electricity to the UK by 2030.

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COME TO OUR NEXT ENTERPRISE FORUM-

We’re excited to unveil our next C-level event: The Enterprise Exports & FDI Forum, where we will take a deep dive into two of the most critical topics affecting our community.

Interested to learn more about how Egypt is planning on drumming up foreign direct investment (FDI) for all these green hydrogen, solar and wind agreements? Exports and FDI have never been more important to Egypt’s economy — or its businesses — than in the wake of the float of the EGP and the country’s positioning as a regional renewable energy hub. We think there’s a unique chance to build an export-led economy that makes Egypt a magnet for FDI and all the benefits that will come with it.

Want to join the conversation? Drop us a line on events@enterprisemea.com.

CIRCLE YOUR CALENDAR-

Egypt will host the CSR Forum from 2-5 March at Somabay, Hurghada. The event aims to further discussions put forth during COP27 and boost private and public sector cooperation on climate action. You can register for the event here.

The Arabia CSR Awards is accepting applications until Friday, 30 June. The awardwinners will be announced during a ceremony on Wednesday, 4 October.

The first MENA Solar Conference is accepting applications from published researchers specialized in PV technology until Sunday, 30 April. The Dubai Electricity and Water Authority will be hosting the conference from 15 to 18 November, in conjunction with the Water, Energy, Technology, and Environment Exhibition and the Dubai Solar Show 2023. Researchers can submit their papers here.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

KSA’s PIF completes second green bond issuance of USD 5.5 bn: KSA’s sovereign wealth fund, the Public Investment Fund (PIF), sold USD 5.5 bn of green bonds in its second issuance of the debt instruments, according to a SPA statement published last week. The funds will be used to finance or refinance green investments — including projects in renewable energy, energy efficiency, sustainable water management, pollution prevention and control, green buildings and clean transport, the statement notes.

As expected, there was strong investor appetite: The offering was more than 6x oversubscribed, with a combined USD 33 bn in orders, according to the statement. Continued strong investor appetite for green debt instruments is one of several key trends we expected at the beginning of 2023. Green bond demand would likely continue to outstrip supply — including in emerging and frontier markets, European Bank for Reconstruction and Development Principal, Local Currency & Capital Markets Development Razvan Dumitrescu told Enterprise Climate late last year.

This is PIF’s second (massive) green bond issuance in four months: PIF sold a total of USD 3 bn in green bonds in its first offering of the instruments — which included the issuance of the world’s first 100-year green note — in October last year. The three-tranche sale drew in orders of around USD 17.9 bn, making it nearly 6x oversubscribed.

The UAE’s Al Fattan Energy signed an agreement with South Korea’s LTechUVC to build a USD 400 mn, 200 MW green hydrogen and ammonia facility, according to a report by Khaleej Times released last week. The project, the agreement for which was signed last month, will be built in the Kezad industrial complex, the outlet notes. No information was provided on the planned time frame of the project.

The stakeholders: Al Fattan Energy — a subsidiary of Al Fattan Holding and Investment — works on renewable energy, nuclear, and oil and gas projects in MENA, specializing in infrastructure, transport, maritime defense, naval vessel construction, and oil and gas. LTechUVC is a consulting firm focused on hydrogen-based energy and will oversee the participation of other “major” South Korean firms “with expertise in the field” in the KEZAD green ammonia plant construction, Khaleej Times notes, without providing further details.

US-based wastewater treatment company Gradiant has acquired Dubai-based water treatment firm Advanced Watertek, according to a statement picked up by Bloomberg last week. The financial details were not disclosed in the statement.

Gradiant wants to roll out cleantech in MENA: The company will set up a center of manufacturing excellence at Advanced Watertek’s 18k square foot Dubai facility, the statement notes. The aim is for the acquisition to boost Gradiant’s manufacturing capabilities, accelerate the roll-out of its tech to clients in MENA, and strengthen its regional market presence, it adds.

And make inroads into the lithium mining industry: Gradiant signed an agreement with US-headquartered energy multinational Schlumberger last October to partner on lithium extraction, which will see Gradiant tech used to distill the lithium solution and recover freshwater. Lithium is also a key element in electric vehicle batteries and is poised to see surging global demand.

About Gradiant: The company provides cleantech projects for wastewater treatment, focusing on industrial wastewater to prevent contaminants from being released into the environment and to reduce manufacturing dependence on public water supplies, co-founder Prakash Govindan told Forbes India in a December interview. This is a more complex process than treating sewage or domestic wastewater, and Gradiant’s cutting-edge tech helps companies recover up to 95% of wastewater streams in a cost-effective way, Govindan added.

About Advanced Watertek: Advanced Watertek designs and builds water treatment systems for a range of industries, including mining, agriculture and infrastructure, according to its website. It provides organizations with systems to reuse and recycle wastewater along with desalination, filtration and disinfection equipment. The firm currently has offices in Oman, Bahrain, KSA and Australia, and operates in over 50 countries.

KSA’s sovereign wealth fund, the Public Investment Fund (PIF), has closed the acquisition of a 30% stake in Saudi Tabreed through a private placement that was first announced in December, it confirmed in a statement yesterday. Saudi Tabreed is the Saudi arm of DFM-listed National Central Cooling Company Tabreed. The stake PIF acquired was estimated to be worth some USD 250 mn, Bloomberg noted in December.

About Tabreed and Saudi Tabreed: Saudi Tabreed currently manages some 779k tons of refrigeration in KSA through contracts with major companies including Aramco’s Dhahran district cooling plant, the Jabal Omar district cooling plant in Mecca, the district cooling scheme at Riyadh’s King Khalid International Airport, and a centralized cooling plant at Dhahran’s Amaad business park, the statement notes. It’s also the exclusive cooling services provider for the Red Sea Project. Tabreed provides district cooling services across the GCC region, with 86 plants currently in operation.

Pakistan’s Netline inks agreement for 20 MW of solar power in KSA: Karachi-based renewables startup Netline Group signed an agreement with Saudi Arabian power company Tamheed Energy to develop solar power plants generating a total of 20 MW in Neom and other parts of the kingdom, Netline managing director Umair Zavary told Gulf News. The estimated price tag for the projects is USD 10 mn.

Netline has established a footing in Saudi already: The company has around 400 solar power systems deployed across KSA with a 10 MW generation capacity and has a USD 3 mn agreement in place with Neom for the design of the city’s electric power system, Arab News quotes Zavary as saying.

About Netline: The startup — which recently went through its Series A funding round at a USD 4.5 mn valuation — has plans to begin wide-scale manufacturing of PV panels by 4Q 2024 and acts as a consultant, designer, and EPC contractor for solar energy projects covering a wide range of clients including commercial, residential, and industry-scale customers, according to their website.

Morocco-based agritech startup Sand to Green raised USD 1 mn in seed funding to shore up food security using agroforestry tech, according to a company statement. Funds were raised from Norway-based VC outfit Katapult and Nairobi-based VC fund Catalyst, as well as other angel and undisclosed investors.

Where’s the money going? The company will use the funding to launch an agroforestry plantation spanning some 20 hectares and will prepare to roll out hundreds more projects in the Moroccan desert, the statement notes. Sand to Green will also use the capital for research and development before expanding further into the remainder of Africa.

About Sand to Green: The startup developed software plantation models specifically suited to dry environments. On the sustainability front, Sand to Green says it will use solar-powered desalination units to source its irrigation needs, will use drip irrigation techniques to minimize water wastage, and will collect field and satellite data on a daily basis to manage their plantations, according to the company’s website.

Not the only MENA-based startup Catalyst is backing: Catalyst Fund said it would invest USD 2 mn in 10 African startups focused on climate resilience last month. Each of the startups will receive USD 100k in equity financing and another USD 100k for venture building assistance. Sand to Green, Egyptian waste management company Bekia, and Egyptian agritech firm Visual and AI solutions are among the recipients.

Egypt’s Abou Ghaly Motors is introducing Chinese automaker Geely’s Geometry C electric vehicle (EV) to the local market, according to a company statement. The EV will cover up to 550 km on a full charge with some 201 horsepower, saving motorists some 80% in fuel and running costs when compared with traditional vehicles, the statement adds. No timeline for the rollout in Egypt and MENA was disclosed.

Abou Ghaly plans to start assembling Geely EVs in Egypt this year, the firm’s group chief operating officer Tamer Kotb told Enterprise AM on Saturday. Geely will provide the know-how and technical expertise, while Abou Ghaly will cover the initial investment cost and take charge of marketing, distribution and sales, he said. The local automaker is in negotiations with Geely to use Egypt as an export hub for the Chinese automaker’s EVs to Africa, he added.

Abou Ghaly thinks Egypt is ready for EV assembly: “Talking to leaders in the green-industry ecosystem during the Enterprise Climate X Forum in December reinforced our belief that the Egyptian market is ready for EVs,” Kotb said. The company has been talking to “Geely and other international EV automakers about importing and even assembling their EV cars in Egypt and trying to convince them that local demand and the infrastructure are up to par,” he added.

And an EV charging infrastructure is taking shape: Local renewable energy player Infinity has built at least 115 charging stations so far in the country as part of a plan with the government to set up 6k vehicle charging points at 3k stations across Egypt.

Abou Ghaly is not the only player with local EV assembly plans: Egypt-based Al Mansour Automotive — one of the world’s largest dealers of General Motors vehicles — hopes to start assembling EVs in Egypt in 2023, with plans to produce 15k EVs in Egypt by 2025.

Could we see locally assembled EVs hitting Egyptian streets by 2024? Egypt is supporting Abou Ghaly and other private secretary players with incentives to get the EV industry off the ground, Environment Minister Yasmine Fouad said at the launch event of Geely’s Geometry C, without disclosing the specifics of its support package. The minister expects the first locally-assembled EVs to roll off production lines in 2024.

Oman Power and Water Procurement Company (OPWP) is launching three wind IPPs across the sultanate, the Oman Observer reports. OPWP says the Duqm wind project and Jaalan Bani Bu Wind will come online in 2Q 2026 followed by the Harweel Wind project in 4Q 2026. While the capacity of the project was not announced, speculations rank the projects as yielding between 100 to 200 MW each. Tender documents will be available until Saturday, 25 February for interested bidders and submission deadlines are set on 22 and 23 March for commercial and legal bids.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Germany-based ILF Consulting Engineers was awarded a contract to carry out pre-development consulting work for three solar PV parks in Saudi Arabia. The parks are pegged to be the biggest renewable energy projects in the KSA by installed capacity. (Trade Arabia)
• Tunisia is establishing a new solid waste management center — a partnership agreement between Bizerte city and the Rostock municipality in Germany — set to be operational by April 2023. The initiative will be funded by the German development agency (GIZ) and aims to treat at least 2.6 mn tons of solid waste annually. (Agence Tunis Afrique Presse)
• Saudi Arabia has signed an MoU with Standard Chartered Bank to assess the requirements for sustainable investments in the kingdom’s mining sector, with a focus on accelerating projects and investments in mining and mining value chains — including green metals and battery components. (SPA)
• The Saudi Program for the Development and Reconstruction of Yemen is providing three Yemeni governorates with 12 solar-powered drinking water stations and 35 agricultural irrigation systems run with renewable energy. (SPA)
• Dubai Electricity and Water Authority CEO Saeed Al Tayer met on Thursday with a high-ranking delegation from Germany’s Saxony region to discuss potential cooperation in renewable energy and green mobility projects. No further details on the projects were disclosed. (Twitter)
• A business delegation from Hong Kong visited the UAE last week to explore collaboration in areas including sustainability, smart city development, and technology. (Bloomberg)
• UAE’s Masdar City expects work on its 30k sqm renewables-powered community The Link to be completed by 1Q 2025. (Wam)