Norton Rose Fulbright advises on US$1.5bn sustainability-linked loan

Global law firm Norton Rose Fulbright has advised the lenders on US$700m and AED3,054bn Revolving Credit Facilities for Majid Al Futtaim Holding.

A leading shopping malls, communities, retail and leisure pioneer across the Middle East, Africa and Asia, Majid Al Futtaim Holding has signed its inaugural US$1.5bn (AED5.51bn) Sustainability-Linked Loan (SLL), a financial instrument secured primarily on environmental, social and governance (ESG) related performance.

A landmark transaction, the SLL makes Majid Al Futtaim the first privately-owned Dubai corporation to borrow via this type of innovative facility and is the first and only "penalty-only" loan structure in the region, with clear targets for each year of the loan. The facilities include a sustainability-linked margin ratchet connected to various ESG KPIs which are independently verified by an external consultant. Standard Chartered Bank acted as sole sustainability coordinator.

The Dubai-based Norton Rose Fulbright team was led by banking and finance partner Nicholas Robinson. He was assisted by partner and regional head of ESG Louisa Lynch, as well as senior associate Seya Rahnema.

Nicholas Robinson commented:

“This deal is important in that it not only marks the ongoing commitment of the Majid Al Futtaim Group to becoming a leading green and sustainable business, but also is a significant milestone in the UAE’s wider development of green and sustainable finance. Together with other market “firsts” in this space such as the sustainable financing of the UAE’s Taweelah sea water reverse osmosis desalination plant and Emirates NBD’s recent debut sustainability linked loan, it is part of a growing body of work that positions Norton Rose Fulbright at the forefront of green and sustainable financing in the region.”

Louisa Lynch added:

“2021 continues to be a year of ESG firsts for the world, and for the Middle East specifically. The region is making strides towards normalising the implementation of more measurable ESG objectives, and it’s something we’re seeing more and more clients make an active effort to do as part of the work our ESG practice is doing.”