Saudi Arabia’s PIF expands green investments to $19bn across 91 projects

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Updated 14 October 2024
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Saudi Arabia’s PIF expands green investments to $19bn across 91 projects

  • Saudi sovereign wealth fund has allocated $457 million for these projects, with $372 million for eight green building projects
  • Remaining $18.9 billion were allocated to 73 under construction projects spanning the same categories

RIYADH: Saudi Arabia’s Public Investment Fund has expanded its green project investment plan to over $19.4 billion, covering 91 eligible projects in areas such as renewable energy and clean transportation.

In its second ‘Allocation and Impact Report,’ PIF provided an update on the allocation and impact of its green bonds as of June 30.

The new paper revealed that “PIF has currently identified a capital expenditure portfolio of over $19.4 billion of eligible green projects, of which $8.5 billion has been earmarked to be allocated under PIF’s two green bonds,” referring to those issued in 2022 and 2023 — totaling a combined $8.5 billion.

According to the report, there are 18 operational projects categorized under renewable energy, energy efficiency, green buildings, clean transportation, as well as sustainable water management, pollution prevention, and sustainable management of living natural resources and land use.

The Saudi sovereign wealth fund has allocated $457 million for these projects, with $372 million for eight green building projects.

The remaining $18.9 billion was allocated to 73 under construction projects spanning the same categories, with green buildings also taking the largest share at $6.3 billion for three projects.

Prominent green projects

PIF’s green bond proceeds are being funneled into a wide range of projects to reshape Saudi Arabia’s future. One of the most prominent undertakings is Red Sea Global, a tourism development owned by PIF. 

According to the report, PIF has allocated $1.7 billion of green financing for The Red Sea and AMAALA, as of 30 June 2024. 

PIF’s investment qualifies under the ‘Green Buildings’ category in the Green Finance Framework, which means that new or existing commercial or residential buildings must get a third-party certified green building standard to be eligible for funding.

The Framework published in 2022 is used as the basis to issue green bonds, sukuk, loans and other debt instruments, known as green financing instruments.

PIF said in the report that RSG is committed to regenerative tourism destinations that preserve and enhance the natural environment. 

Spanning 32,000 square km, RSG’s portfolio includes The Red Sea and AMAALA projects, which will offer up to 11,000 keys across 80 hotels, as well as residential and hospitality assets built with sustainability at their core.

As for the impact of this project, the report added that to date, “there are nine green buildings that are already operational, including four hotels, four residential clusters and one management office.”

On average, these buildings achieve 20 percent energy savings compared to conventional buildings, totaling 18,000 MWh per year. As these assets are independent of the national grid and are 100 percent solar powered, they avoid 36,000 tCO2e annually. 

“When all the assets are completed across both destinations, total avoided emissions will exceed 600,000 tCO2e per year,” the report said.

Under the “Sustainable Water Management” category, the report added the NEOM Water Distribution project. PIF’s contribution to this project included fully funding NEOM’s water transmission and distribution pipelines and allocating over $1 billion to support nine water transmission projects across the region. 

“This key category emphasizes that investments and expenditures in projects and infrastructure must enhance water-use efficiency,” the wealth fund said.

To date, a 12-bay tanker filling station supplying 18,000 cubic meters per day of potable water and a 30-kilometer section of distribution pipeline is already operational, the report revealed.

It said that an additional three filling stations and over 500 kilometers of water transmission pipeline are currently under construction, adding: “Once completed, these assets will improve resilience and support de-risking of water scarcity in Saudi Arabia.”

Measurable impact and ESG leadership

Projects funded by PIF’s green bonds are set to generate enough renewable energy to power 160,000 homes annually and save 7.7 million MWh through energy-efficient technologies, including the installation of over 211,000 energy-efficient bulbs and 6,000 HVAC systems.

In the area of water sustainability, PIF’s investments in desalination and wastewater treatment are projected to treat 49.4 million cubic meters of wastewater and desalinate 1.2 million cubic meters of seawater each year.

Green building projects funded by the bonds are expected to save 711,000 MWh annually, supporting Saudi Arabia’s efforts to cut energy consumption and carbon emissions.

PIF’s green finance strategy is also setting global benchmarks. As a founding member of the One Planet Sovereign Wealth Funds initiative, PIF is integrating climate change into its investment strategies.

Ranked seventh globally and first in the Middle East in the Global Sovereign Wealth Fund’s Governance, Sustainability, and Resilience Scoreboard, PIF’s efforts highlight its global environmental, social and governance leadership.

To ensure transparency and accountability, PIF has established an ESG and Sustainability Steering Group. 

The body meets quarterly to monitor fund allocation, track project impacts, and ensure all green bond investments align with PIF’s Green Finance Framework. This governance structure underscores PIF’s commitment to sustainability and strong ESG practices.
 
A global first for green bonds

In October 2022, PIF issued its first-ever $3 billion multi-tranche green bond, described as “the first green bond by a Sovereign Wealth Fund.” This was followed by a larger $5.5 billion offering in February 2023, both of which were well-received by global investors.

By June 2023, PIF had allocated $5.2 billion of the $8.5 billion raised to environmentally-focused projects. It had identified a green project portfolio worth $11.7 billion, with $8.5 billion designated for bonds.

Already, $1.3 billion has been used for initiatives like renewable energy, energy efficiency, and sustainable water management. 

Of the $706.2 million from the October issuance, $458.6 million went to green buildings, $138.2 million to energy efficiency, and $45.2 million to water management. Similarly, $629.2 million from the February issuance was allocated to renewable energy, energy efficiency, and clean transportation.

Unallocated funds are managed under PIF’s liquidity policy, ensuring all investments align with its ESG principles. Notably, the October issuance included a 100-year tranche, signaling PIF’s long-term commitment to sustainability.

The success of these bonds is evident in the February issuance being six times oversubscribed, with orders exceeding $33 billion, showing strong global investor confidence in PIF’s leadership in green financing.

Vision 2030 and PIF’s role in economic diversification

PIF’s green bond strategy is deeply intertwined with Saudi Arabia’s Vision 2030 — a transformative blueprint aimed at diversifying the country’s economy away from oil dependency and establishing new economic sectors that are future-facing and sustainable. 

PIF is tasked with leading the charge, playing a key role in supporting the nation’s commitment to achieving net-zero carbon emissions by 2060. 

The fund has set its target to reach net-zero emissions by 2050, positioning itself as an integral player in the global fight against climate change.

The organization’s mandate under Vision 2030 includes expanding non-oil gross domestic product, generating jobs, and enhancing local content, as well as nurturing a thriving private sector. 

PIF is attracting sustainable investments into Saudi Arabia’s eco-conscious economy by issuing green bonds and funding critical projects in renewable energy, energy efficiency, water management, and pollution control, among others. 

The initiatives are expected to contribute significantly to the Kingdom’s economic growth while ensuring environmental sustainability.


Oil Updates – prices little changed as US storm threat abates, China stimulus disappoints

Updated 12 sec ago
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Oil Updates – prices little changed as US storm threat abates, China stimulus disappoints

SINGAPORE: Oil prices were little changed on Monday as the threat of supply disruptions from a US storm eased and after China’s stimulus plan disappointed investors seeking fuel demand growth in the world’s No. 2 oil consumer.

Brent crude futures rose 4 cents to $73.91 a barrel by 10:14 a.m. Saudi time, while US West Texas Intermediate crude futures were at $70.31 a barrel, down 7 cents.

Both benchmarks fell more than 2 percent on Friday.

Beijing’s latest stimulus package announced at the National People’s Congress (NPC) standing committee meeting on Friday fell short of market expectations, IG market analyst Tony Sycamore said in a note, adding that its murky forward guidance hinted at only modest stimulus for housing and consumption.

ANZ analysts said the lack of direct fiscal stimulus implied that Chinese policymakers have left room for assessing the impact of policies the next US administration will introduce.

“The market will now shift focus to the Politburo meeting and Central Economic Work Conference in December, where we expect more pro-consumption countercyclical measures to be announced,” they added in a note.

Oil consumption in China, the world’s driver of global demand growth for years, has barely grown in 2024 as its economic growth has slowed, gasoline use has declined with the rapid growth of electric vehicles and liquefied natural gas has replaced diesel as a truck fuel.

Oil prices have also eased after concerns about potential supply disruptions from storm Rafael in the US Gulf of Mexico subsided.

More than a quarter of US Gulf of Mexico oil and 16 percent of natural gas output remained offline on Sunday, according to the offshore energy regulator.

Shell and Chevron each said on Sunday they would start redeploying personnel to their Gulf of Mexico platforms to resume operations.

Looking ahead, there were also concerns that US oil and gas output could rise under the new Trump administration although analysts say 2025’s production forecast is unlikely to change.

“We think producers may think twice about turbo-charging US supply in an era when OPEC+ has already staked out plans to gradually raise production targets over the course of 2025,” Tim Evans of Evans Energy said in a note.

Trump’s election promise of hiking import tariffs to boost the US economy have clouded the global economic outlook although expectations that he could tighten sanctions on OPEC producers Iran and Venezuela and cut oil supply to global markets partly caused oil prices to gain more than 1 percent last week.

Oil markets are also being supported by firm demand from US refiners who are expected to run their plants at above 90 percent of their crude processing capacity on low inventories and improving demand for gasoline and diesel, executives and industry experts said.


ROSHN rebrands as multi-asset developer to lead Saudi real estate transformation

Updated 10 November 2024
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ROSHN rebrands as multi-asset developer to lead Saudi real estate transformation

RIYADH: ROSHN, the real estate development company backed by the Public Investment Fund, has announced a bold transformation into a multi-asset real estate developer, the Saudi Press Agency reported.

This move is underscored by the launch of a refreshed corporate identity and a new strategy designed to elevate the quality of life across the Kingdom.

The redefined strategic direction includes an expanded portfolio that spans new categories of real estate assets, marking a significant step in ROSHN’s commitment to reshaping the urban landscape. The company aims to lead the sector’s transformation by creating vibrant, sustainable communities, in alignment with the Kingdom’s Vision 2030 goals.

This move is underscored by the launch of a refreshed corporate identity. SPA

This shift also aligns with Saudi Arabia’s national objective of achieving a 70 percent homeownership rate and enhances ROSHN’s role in driving economic growth and job creation. It marks a key milestone in ROSHN’s leadership within the real estate sector and sets the stage for the development of mixed-use projects and multi-asset destinations across the country.

“ROSHN is proud to be a pioneer in the Kingdom’s real estate development sector, with an ambitious vision to transform the urban landscape,” said Ghada Al-Rumayan, group chief marketing and communications officer. “As ROSHN grows, its vision becomes increasingly clear, reflected in its expansionary approach and commitment to creating distinctive, high-quality destinations that enhance the quality of life across the Kingdom.”

The new identity reflects ROSHN’s dedication to diversifying its real estate offerings. The company is expanding beyond residential communities to include integrated spaces that cater to various segments of society. The goal is to raise living standards and foster economic development, in line with the goals of Vision 2030.

One of the latest projects showcasing this vision is the MARAFY development in Jeddah, which aims to create a pioneering waterway system connecting the Red Sea to Jeddah’s neighborhoods — a first of its kind in the Kingdom.

ROSHN’s current portfolio spans over 200 million sq. m of residential communities, alongside more than 4 million sq. m of commercial spaces, including offices, retail outlets, and tourism facilities. The company also has significant investments in infrastructure, healthcare, education, mosques, and essential services.

Moreover, it is expanding into emerging sectors such as logistics, industrial zones, transportation, entertainment, and fitness centers, reinforcing its broad ambitions and role in diversifying the economy.

By broadening its focus beyond traditional residential developments, ROSHN aims to become a leader in the development of mixed-use, multi-asset communities that contribute to the Kingdom’s long-term growth and prosperity.


Closing Bell: Saudi main index slips to close at 12,103

Updated 10 November 2024
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Closing Bell: Saudi main index slips to close at 12,103

  • Parallel market Nomu lost 10.85 points, or 0.07%, to close at 29,248.15
  • MSCI Tadawul Index lost 3.03 points, or 0.20%, to close at 1,518.76

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 27.67 points, or 0.23 percent, to close at 12,103.16. 

The total trading turnover of the benchmark index was SR6.09 billion ($1.62 billion), as 82 of the stocks advanced and 144 retreated. 

The Kingdom’s parallel market Nomu also lost 10.85 points, or 0.07 percent, to close at 29,248.15. This comes as 47 of the listed stocks advanced, while 31 retreated. 

The MSCI Tadawul Index lost 3.03 points, or 0.20 percent, to close at 1,518.76. 

The best-performing stock of the day was Riyadh Cement Co., whose share price surged 9.88 percent to SR32.80. 

Other top performers were Saudi Industrial Export Co. and Miahona Co., whose share prices rose by 9.76 percent and 5.81 percent to SR2.70 and SR30.95, respectively. 

The worst performer was Al-Babtain Power and Telecommunication Co., whose share price dropped 8 percent to SR39.65. 

Al-Jouf Agricultural Development Co. and Shatirah House Restaurant Co. were among the worst performers, with their share prices falling by 7.67 percent and 7.11 percent to SR62.60 and SR19.60, respectively.

On the announcements front, Al-Jouf Cement Co. released its interim consolidated financial results for the period ending Sept. 30.

According to a statement on Tadawul, the company reported a net profit of SR30 million for the first nine months of the year, marking a 30.8 percent decline compared to the same period in 2023. 

The decrease is primarily attributed to lower export sales, higher heavy fuel oil prices, and an increase in administrative expenses due to the rescheduling of credit facilities. 

Al-Jouf Cement Co. ended the session at SR10.16, down 1.38 percent. 

MBC Group Co. also announced its interim financial results for the period ending Sept. 30. A bourse filing revealed that the company recorded a net profit of SR250 million for the first nine months of the year, reflecting a 36,686 percent increase compared to the same period in 2023. 

The surge is primarily because the previous year’s results only covered the period from July to September 2023 — following the acquisition of subsidiaries — while the 2024 results account for the full nine months. 

MBC Group Co. ended the session at SR46.80, down 1.07 percent. 

Arabian Centers Co., or Cenomi Centers, reported a net profit of SR867.6 million for the first nine months of 2024, a 14.83 percent decline compared to the same period in 2023, according to a Tadawul statement. 

The drop was mainly due to higher net finance costs, increased impairment losses on receivables, and a rise in revenue and investment property gains. However, advertising, promotional, general, administrative, and other operating expenses all decreased. 

The company closed at SR21.44, down 2.17 percent. 

Fawaz Abdulaziz Alhokair Co. reported a net loss of SR48.3 million for the first nine months of the year, a 45.7 percent decline compared to the same period in 2023, according to a bourse filing. 

The loss was mainly due to a decline in gross margin, though offset by lower selling, general, and administrative expenses, higher other operating income, and reduced net finance expenses. 

The company closed at SR13.18, up 0.47 percent. 

Saudi National Bank has launched the offering of its SR-denominated Additional Tier 1 Sukuk, with a minimum subscription of SR1 million.

According to a Tadawul statement, the Sukuk’s amount and terms will be determined based on market conditions. SNB Capital Co. has been appointed as the sole lead manager, bookrunner, and lead arranger. 

The bank closed at SR33.00, up 0.92 percent. 


Saudi Arabia to boost military sector, partnerships at Airshow China 2024

Updated 10 November 2024
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Saudi Arabia to boost military sector, partnerships at Airshow China 2024

  • Saudi Pavilion will feature various government entities and national companies specializing in the military industry sector,
  • It will showcase a range of military products and equipment, particularly in aviation

JEDDAH: Saudi Arabia will participate in the 2024 China Aviation and Aerospace Exhibition in Zhuhai, aiming to foster partnerships and further develop its military sector.

The General Authority for Military Industries is coordinating the Saudi pavilion’s participation in the global event scheduled for Nov. 12 to 17.

The display area will feature various government entities and national companies specializing in the military industry sector, offering a valuable opportunity to explore the latest advancements in technologies and equipment within the field.

The Kingdom’s defense sector is projected to make a significant contribution to the national economy by 2030, with an expected gross domestic product contribution of $17 billion and a direct addition of $9 billion to non-oil revenues. The division’s growth is set to create 100,000 direct and indirect job opportunities by the end of the decade.

Some 74 investment opportunities are emerging from efforts to develop and localize supply chains, with an estimated value of SR150 billion ($40 billion). The total investment contribution from the defense sector is expected to reach $10 billion by 2030, according to the GAMI website.

Saudi Arabia’s participation in international events marks a crucial step in solidifying the Kingdom’s position as one of the fastest-growing economies among the G20 nations, said a statement by GAMI.

The initiative also emphasizes the country’s commitment to attracting global investors and advancing the objectives of Saudi Vision 2030 within the military sector.

The Kingdom’s pavilion will showcase a range of military products and equipment, particularly in aviation, underscoring the nation’s efforts to enhance national military manufacturing capabilities. By 2030, Saudi Arabia aims to localize over 50 percent of government spending on military equipment and services.

The pavilion will also highlight the sector’s investment potential and the favorable environment for investments in the counttry’s defense and military industries.

Established in 2017, GAMI collaborates with government entities and private sector partners to empower national and international firms within the military industry. This initiative aims to localize and enhance domestic manufacturing capabilities, positioning the sector as a key contributor to Saudi Arabia’s economic prosperity and defense independence.

Several government bodies, including the Ministry of Investment and the General Authority for Defense Development, are participating in the Saudi pavilion at the exhibition, alongside companies such as the National Co. for Mechanical Systems, WAKEB Co. for Artificial Intelligence and Autonomous Systems, Milestone Aviation Services, and Homat Al-Watan Co, said the statement.

GAMI’s efforts, in partnership with the public and private sectors, support the growth of the national economy by establishing policies and regulations that create a good investment environment.

The sector is now more accessible to investors due to its market size, cross-sector impact, competitive advantages, and GAMI’s focus on developing industrial participation programs and policies.


Saudi Arabia’s flyadeal boosts Dammam network with 3 domestic routes

Updated 10 November 2024
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Saudi Arabia’s flyadeal boosts Dammam network with 3 domestic routes

  • The new destinations, Najran, Tabuk, and Yanbu, are strategically significant
  • Expansion marks the first phase of flyadeal’s 2025 growth plan

RIYADH: Saudi Arabia’s low-cost airline, flyadeal, will launch three new domestic routes from Dammam starting in January, aligning with the Kingdom’s Vision 2030 objectives. 

The airline will launch daily flights from Dammam to Najran and four weekly services to Tabuk on Jan. 1, followed by three weekly flights to Yanbu starting Jan. 2.

The announcement was made by Steven Greenway, CEO of flyadeal, on the sidelines of the World Travel Market in London.

Greenway said the new routes are part of flyadeal’s mission to connect smaller towns and cities across the Kingdom, catering to populations under 400,000 that are underserved yet have a growing demand for air travel.

“Having well-established bases in Riyadh and Jeddah, flyadeal is now strengthening its presence in the Eastern Province by increasing frequencies on existing routes and adding three new destinations connected to Dammam,” Greenway said.

He added: “Our new flights will facilitate travel for business and leisure purposes, support the growing desire among Saudis and international visitors to discover the rich diversity that the country offers, and attract a growing expatriate population to explore the Kingdom.”

The expansion complements Vision 2030, which seeks to diversify Saudi Arabia’s economy and transform the Kingdom into a global transportation and logistics hub.

By enhancing access to remote and economically vital cities, flyadeal supports Vision 2030 objectives to strengthen tourism, stimulate business opportunities, and increase domestic mobility.

The new routes will also advance the nation’s strategy to welcome 150 million visitors annually by 2030.

The expansion marks the first phase of flyadeal’s 2025 growth plan, which includes adding more domestic routes and launching international flights from its primary hubs in Riyadh, Jeddah, and Dammam in the coming months.

The developments align with Saudi Arabia’s broad national efforts to establish itself as a key player in the aviation sector, with enhanced infrastructure, expanded air service networks, and a focus on customer experience.

Operating from its three main bases, Riyadh, Jeddah, and Dammam, flyadeal serves nearly 30 year-round and seasonal destinations across the Kingdom and select cities in the Middle East, Europe, and North Africa.

The airline’s fleet comprises 36 modern Airbus A320 narrowbody aircraft, optimized for efficiency and passenger comfort, reinforcing Saudi Arabia’s commitment to advancing sustainable and high-quality air travel.

The new destinations, Najran, Tabuk, and Yanbu, are strategically significant. Najran, an agricultural hub in the southwest, contributes substantially to the local economy.

Tabuk serves as a gateway to the Red Sea coast and plays a pivotal role in the Kingdom’s large-scale tourism and development projects.

Yanbu, Saudi Arabia’s second-largest port in the Madinah province, is a hub for petroleum and petrochemical industries, supporting national economic objectives and Vision 2030’s goals for diversified growth.

With international routes to Amman, Cairo, and Istanbul, flyadeal positions itself as a crucial connector between the Kingdom and key regional and international destinations, advancing Vision 2030’s ambition of creating an integrated, globally connected Saudi Arabia.