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ADGM predicts fresh wave of green finance companies

The Chimera JPMorgan UAE Bond UCITS exchange-traded fund will debut on the Abu Dhabi stock exchange on March 26
  • Free zone has “strong pipeline” 
  • $30bn Altérra fund adds momentum 
  • Green bond issuance up 149%

Abu Dhabi Global Market has a “strong pipeline” of green and sustainable finance companies due to open in the free zone this year as the sector expands and matures, a senior ADGM official has told AGBI.

“There are a number of asset managers and others establishing themselves here that are green and climate transition-focused,” said Emmanuel Givanakis, chief executive of ADGM’s Financial Services Regulatory Authority.

The companies range from environmental, social and governance (ESG) funds and fund managers, carbon credit funds, carbon trading platforms, climate transition consultants and impact investors. 

Altérra – a $30 billion climate-focused fund set up by the UAE in partnership with BlackRock, TPG and Brookfield at the Cop28 summit – and the Global Climate Finance Centre think tank are both headquartered at ADGM and will drive further momentum, Givanakis added, saying: “The focus is on growing the ecosystem.” 

Pressure on consumers and investors to lower emissions has increased appetite for green bonds, carbon trading and other types of “sustainable” finance. 

Last week, S&P Global Ratings predicted sustainable bond issuance to near $1 trillion in 2024. The Middle East was the fastest-growing region in 2023, it said, with issuance up 149 percent annually to a record $23 billion. 

Total ESG assets under management are projected to reach almost $34 trillion by 2026, according to PwC. Givanakis expects the UAE to “play a significant role in this growth”. 

ADGM attracted an influx of green finance companies in the second half of last year after it published a regulatory framework in July to govern the sector amid rising demand. The free zone plans further regulation this year, AGBI reported.

For Paris-headquartered climate impact investor TimeToAct Capital, setting up at ADGM in November “marked a crucial step in the company’s growth strategy”, according to its chief executive Frédéric Payet.

“We are drawn to the region because of the strong momentum towards sustainability among local players and financial institutions,” he said.

UK net zero asset manager Hycap Group, which also launched at ADGM in November, agreed with Abu Dhabi’s government this month to build a green hydrogen production and storage complex

Hycap expects its UAE business to grow to 50 percent of the group’s total assets under management within the next three to five years, chairman and founding partner Jo Bamford told AGBI

Meanwhile, Offset8 Capital has facilitated its first investments into carbon credit projects from Abu Dhabi, after opening there last summer. 

Co-founder Ivan Mozharov pointed to the free zone’s tightening of carbon trading rules in 2022, which has increased “trust, security and investor protection”. 

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