Capital Markets Program
PIF aims to become an active player in global debt markets and support the development of an active local market, where it can tap into either at will for short or long-term liquidity and with a broad range of instruments. PIF’s capital markets program aims to further develop its funding strategy and execution capabilities at both PIF and portfolio company levels and enable PIF (or its portfolio companies) to participate in global and local debt markets.
It will also support in expanding PIF’s debt raising capacity, to be used as a source of funding for PIF investments, in line with PIF’s funding strategy, instill cash flow management discipline, and optimize equity returns for PIF and its portfolio companies.
Further details, including financial information, can be found on https://www.londonstockexchange.com/news-article/market-news/publication-of-an-offering-circular/15646873
FAQ
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What is a green bond?
A green bond is a debt instrument used by institutions to raise funds in order to finance projects focused on combating climate change and promoting environmental sustainability. It is a financial tool that is increasing in significance internationally, as governments and companies seek to address the environmental issues the world is facing today.
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Why is PIF issuing a green bond?
The issuance of a green bond is a natural continuation of PIF’s mandate, given the central importance of sustainability for the Fund. As Saudi Arabia has the ambition to diversify its economy, PIF is enabling this transformation through various projects and investments. The Fund has recognized that an effective tool to aid in this process is green financing to support its eligible green projects.
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Why would PIF seek to borrow money to finance its projects?
PIF’s objectives to establish a capital market program has been realized through this bond issuance. PIF is well-capitalized with a strong balance sheet and ample liquidity to support its investment mandate and existing capital commitments in KSA and globally. Borrowing and debt instruments represent one of the four sources of funding available to PIF, ensuring flexibility and ability to finance activity over the long-term.
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What are the benefits of issuing a green bond?
The issuance will enable PIF to access a wider range of investors including those considering environmental and social as well as governance criteria within their investment decision-making process. It will also allow investors to diversify their portfolio of green investments, thereby potentially accelerating a virtuous circle of sustainable investments globally.
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How will the proceeds be allocated?
As per PIF’s Green Finance Framework, proceeds from the green bond issuance will be allocated to finance/refinance PIF’s eligible green projects across Saudi Arabia, including green buildings, renewable energy, energy efficiency, sustainable water management and other initiatives. Giga-projects such as NEOM, Amaala, and The Red Sea Development Company show large amounts of projects eligible for financing that will help transform the Kingdom’s economy.
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What has PIF done to promote sustainability?
PIF has taken significant steps in terms of governance and policies to contribute to sustainability. The Fund is a founding member of the One Planet SWF Initiative, an international platform that looks to accelerate efforts to integrate financial risks and opportunities related to climate change in the management of large, long-term asset pools. As an investment fund, PIF acts by acquiring stakes in companies that fit its mandate, e.g. ACWA Power and Lucid, and has established the Saudi Investment Recycling Company (SIRC), active in managing different waste types, and manages The National Energy Services Company (Tarshid). PIF is supporting the establishment of the MENA Voluntary Carbon Market to facilitate trading of carbon credits in the region.
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How does the green bond issuance help support Saudi Arabia’s energy transition?
The issuance will finance tangible projects on the ground. This will further accelerate the green transition and help reach key country-level objectives, including reaching net zero by 2060 and the 50% target for renewable energy in the energy mix by 2030 where PIF is responsible for developing 70% of the Kingdom’s renewable energy targets for the Kingdom by 2030.