Bahrain-based Infracorp, an infrastructure fund spun out of asset manager GFH Financial Group, aims to issue around $800 million in perpetual green sukuk — Islamic bonds — in the first quarter, GFH’s chief executive said on Monday.
Infracorp has hired banks to advise on the debt sale, GFH CEO Hisham Alrayes told Reuters in an interview, but did not name them. Allen & Overy was hired as legal adviser and KPMG as auditor.
Infracorp’s roughly $1 billion in capital will come from the sukuk as well as $200 million in equity.
The fund has $3 billion in assets under management and was spun off to allow Infracorp to focus on infrastructure assets while GFH mainly looks at financial instruments.
Proceeds from the sukuk sale will be eligible to finance environment, social and governance (ESG) goals, a focus in the Gulf and around the world as governments and investors acknowledge the need to curb emissions and improve corporate governance.
Alrayes said GFH was in talks with strategic and financial investors to buy a stake in Infracorp, which would initially reduce its stake in the spun-out company to 40 percent, and eventually dilute GFH’s share to 20 percent.
Eventually, he said this would “bring down our ownership and hence de-consolidate it from our book and (Infracorp) becomes one of our associates.”
GFH last year received approval to issue up to $300 million in Additional Tier 1 (AT1) sukuk — debt raised by financial institutions to shore up their core capital, Alrayes said.
GFH could issue between $100 million and $150 million in AT1 sukuk this year, should it need and if market conditions are right, he added.