In quest of funds, Saudi developers plan private NEOM tour for bankers

By Al Mayadeen English
Source: Bloomberg
23 Apr 2024 14:43

Saudi Arabia is looking to secure funds for its $1.5 trillion NEOM project, which has recently been scaled back.

Tarek Qaddumi (R), executive director of the Saudi Arabia mega-project NEOM, gestures at a map showing NEOM sites as he stands beside Nicholas Ho (L), the top Hong Kong official responsible for implementing China's Belt and Road Initiative, at an exhibition at the M+ museum for visual culture in Hong Kong, China, on April 19, 2024. (AFP)

Saudi Arabia's flagship developmental project, Neom, has turned into a never-ending cash blackhole as the country looks to raise even more money for the stalled project.

Hundreds of bankers are set to arrive in Saudi Arabia's Neom project this week as developers look for further funds to tap into, according to Bloomberg. Neom’s Chief Executive Officer Nadhmi al-Nasr will host the financiers along with other top government officials, people familiar with the matter told the outlet.

The invitees will also visit Saudi Arabia's odd and "futuristic" The Line area, a long strip that would supposedly be developed into a linear city. According to Bloomberg, the event will not be publicized and aims to incentivize bankers to invest in the project.

Al-Nasr, seeking to sell them the idea, plans to show potential investors the work on the ground in Neom, rather than have them depend on virtual reality videos to make their minds up.

In total, Neom's individual projects will need around $1.5 trillion for their completion, as the Kingdom hopes to build a mountain ski resort and an artificial lake, as well as an industrial development that floats on the Red Sea.

The mobilization to secure the needed funds comes after Riyadh scaled back its medium-term ambition for Neom, as the government has dropped its expected residents in The Line from 1.5 million in 2030 to 300,000.

Several foreign banks have been "hesitant" to provide major loans to Neom, citing the fact that the project has not been given a government guarantee, according to Bloomberg.

So far, most of the funds have been sourced from equity injections from the project's owner, the Saudi Public Investment Fund (PIF). However, the developers have hired banks to advise them on an upcoming sale of Riyal bonds related to the Neom project, which is expected to raise $1.33 billion.

Local banks and developers have also put some money into the project, including a 10 billion Riyal loan and a 3 billion Riyal loan to finance a luxury tourism island in the Red Sea.

The Vision 2030 plans of the kingdom are set to be partially financed by international funds, aiming to reach $100 billion in foreign direct investment annually by 2030, a figure nearly three times larger than its previous benchmarks.

Recent activities include Neom executives' trips to China to engage potential investors, starting in Beijing and continuing to Shanghai. Al-Nasr emphasized the importance of collaboration with China for NEOM's development and expressed eagerness to strengthen ties with the Chinese business community. Neom's developers also assessed investor interest in cities such as Seoul, Washington DC, Miami, and Paris.

Unlike past engagements involving a few bankers, this week's event marks the first large-scale gathering of financiers from multiple institutions simultaneously at Neom, as the Saudi scavenges for funds.