The Oman Infrastructure Investment Fund (Rakiza Fund), which operates under the auspices of the Oman Investment Authority (OIA), says its strong adherence to Environmental, Social and Governance (ESG) principles in its corporate policies is helping unlock new investment inflows into the fund.
The Muscat-based investment fund is managed jointly by Oman Infrastructure Investment Management (OIIM), an affiliate of OIA, and London-based Equitix, a leading global investor, developer, and long-term fund manager of core infrastructure assets.
At a forum held earlier this week on Islamic banking and finance, organised by Redmoney Events in cooperation with the Capital Market Authority (CMA), a top official underlined Rakiza’s commitment to ESG principles in bringing on board regional and international investors as partners.
Rehab al Lawati (pictured), Chief Operations Officer – Rakiza, said the fund is also embedding sharia-compliance into its model with a view to tapping into promising Islamic finance opportunities in the region.
Participating in a panel discussion on the theme, ‘Islamic Sustainable Finance and Investment’, Rehab said Rakiza’s strong embrace of ESG and sharia-compliant sustainability principles came in response to expectations from prospective investors.
Set up in 2019 as a vehicle to support investment in the Omani and Saudi markets, the fund has been overall well-received by investors, but for one specific shortcoming: the absence of ESG and sharia-compliant principles underpinning its investment model.
“For us at the time, (ESG) was a very new technology here in Oman,” the official noted. “We had to develop an entire policy around ESG within the organisation, to cater to investor demand. It was not only the policy, but also the whole culture of getting the data to (embed) ESG – so we had to start educating the companies, educating the stakeholders around us about the importance of ESG.”
Following interest from potential regional investors, Rakiza then began the task of incorporating sharia-compliance into its investment model, the Chief Operations Officer said. Both ESG and sharia-compliance exercises – while a “tough learning experience” for the Fund – nevertheless proved an opportunity to bring in a different set of investors into the country, she stated.
With leading banks in the Gulf region committing to ESG and sharia-compliant structures, Omani institutions have no choice but to be suitably geared up as well, the official stressed. This is particularly the case with Islamic finance, which is projected to grow at the rate of around 10 per cent annually, she noted.
The Chief Operations Officer also urged state-owned enterprises (SOEs) in Oman not to limit their funding requirements to the conventional side of the international debt market, but to also consider green lending opportunities as well – a move that opens up a wider market to tap, she said.
Over the past year, Rakiza has grown rapidly in the local and regional infrastructure funding space. In June this year, Rakiza Telecommunication Infrastructure LLC, a wholly owned subsidiary of Rakiza Fund, said it would purchase a 30 per cent minority stake in a newly incorporated holding company for Omantel’s passive infrastructure assets in Oman, with London-based Helios Towers retaining the remaining 70 per cent.
Earlier this year, Rakiza signed agreements to acquire a stake of over 31 per cent in Oman International Container Terminal (presently known as Hutchison Ports Sohar) at Sohar Port.
More recently, Rakiza announced that it had received a capital commitment of SAR 1.125 billion, equivalent to RO 115 million, from the Saudi Public Investment Fund, one of the world’s biggest sovereign wealth funds.
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