DUBAI: The Dubai Electricity and Water Authority’s (Dewa) sustainable investment arm has raised Dh2.4 billion on its way to a total amount of Dh100 billion, it says.
Named the Dubai Green Fund, Dewa intends for it to directly invest in environmentally-focused companies, whilst offering loans to businesses in the green sector at reduced interest rates.
Saeed Al Tayer, managing director and CEO, announced the opening of the fund on Tuesday morning at the World Green Economy Summit (WGES).
The fund will also be the first major green fund that will have a dedicated arm for Sharia compliant investments.”
- Saeed Mohammad Al Tayer | Managing Director and CEO of Dewa
“In collaboration with national banks, we are pleased to announce that Dewa has raised Dh2.4 billion for the Dubai Green Fund,” he said.
The fund’s lead investor is National Bonds, a local savings scheme that is 100 per cent owned by Dubai’s sovereign wealth fund, the Investment Corporation of Dubai.
“The intent of the fund is not profit maximisation,” said the investment vehicle’s director, Samy Ben-Jaafar, in response to a question from Gulf News.
Instead, he said, it was to demonstrate that “firstly, it is possible to invest in green projects in a profitable manner, and secondly to show it is possible to de-risk some of the smaller projects, and thirdly, once you do that, you will crowd in the bigger institutional money.”
These institutional investors could be commercial banks, investment banks, or pension funds, among others, he added.
Ben-Jafaar was previously director of the private sector facility at the Green Climate Fund (GCF), a $10 billion (Dh36.73 billion) fund agreed at UN climate talks.
“No pension fund is going to invest in a project because it’s green. They have mandates. It has to make investment sense, ultimately, and then green sense,’ said Ben-Jafaar.
“It will play a role in making Dubai the green capital of the world,” he continued, adding: “We hope to make green mainstream and not an alternative asset class.”
Last week, Al Tayer confirmed that the fund’s intention was still to target Dh100 billion in investment, to be spent on “different types of projects, whether it is renewable, retro-fitting, or green projects, mostly related to efficiency... on the demand side and the supply side.”
He also told members of the press at the same briefing that he would reveal the full roadmap for the Dubai Green Fund during WGES.
The CEO told local media in November 2016 that there was interest in the fund across Europe and Asia, adding that the fund was in talks with a state-owned Chinese bank.
Gulf News understands that a delegation of officials from Dewa and the Dubai Green Fund recently returned from a trip to China.
On the issue of climate change, Al Tayer said: “The world today is witnessing a lot of change, and is feeling the impact of climate change. We are in dire need of adapting to these changes.”
He noted that people often mistook climate change for a merely environmental problem.
“Rising sea levels and so on are not the only impact [of climate change]. Climate change will impact the economy, reaching social and health organisations.”
Participants from the private and public sectors must work together to curb their carbon footprint, he added.
For Lars Kroijer, a veteran hedge fund investor and CEO of AlliedCrowds, the launch of Dubai’s green fund is something of a watershed moment in sustainable investing.
“It sends a hugely positive message to institutional investors that there’s nothing wrong with getting involved in the green space, and it sends a hugely positive message to other sovereign wealth funds, who will say, ‘Why aren’t we doing these things?’” he said.
AlliedCrowds, the business Kroijer founded after winding down Holte Capital, his largely successful hedge fund, is an aggregator of crowdfunding data for the developing world.
He added that the green fund was a progressive step for Dubai, which he argued was trying to become a hub for sustainable companies, investors, and other stakeholders.
“It’s also a huge positive to have very seasoned professionals investing in this space. You have a guy like Samy Ben-Jafaar, the green fund’s director] who could do a lot of very, very cool things in the investing world, and he’s chosen to do the green fund, which is exactly the direction we need to go. I think it sends a massively positive message,” he concluded.