Saudi Arabia to set aside $80 billion for crown prince's megaproject
News Desk || shiningbd
Saudi Arabia will set aside 300 billion riyals ($80 billion) for an investment fund tied to the crown prince’s flagship megaproject, Neom, with plans to invest in companies that agree to operate there.
The Neom Investment Fund could potentially expand to 400 billion riyals, the prince told reporters in Jeddah. For the first time, he also outlined details on how he plans to finance Neom -- one of the largest and most complex construction projects in the world.
The first phase of the project, which runs until 2030, will cost 1.2 trillion riyals, with about half of that covered by the kingdom’s sovereign wealth fund, Prince Mohammed bin Salman said. Officials will seek to raise another 600 billion riyals from other sovereign wealth funds in the region, private investors in Saudi Arabia and abroad, and an initial public offering of Neom itself on the Saudi stock market.
“We have big aims to get Saudi Arabia among the top three largest stock markets on the planet,” Prince Mohammed said, adding that he expects the IPO of Neom will happen around 2024 and could add more than 1 trillion riyals to the size of the kingdom’s market.
The prince’s announcement on Monday was attended by global investors including Bridgewater Associates founder Ray Dalio, Tim Collins of Ripplewood, Saudi Prince Alwaleed bin Talal and Kuwaiti retail billionaire Mohammed Alshaya.
Announced in 2017, Neom is Prince Mohammed’s plan to turn an expanse of desert the size of Belgium into a high-tech region. He’s billed it as a testbed for new technologies that could revolutionize urban life -- as well as a way to attract foreign investment and diversify Saudi Arabia’s oil-dependent economy. But five years in, Neom has been plagued by setbacks, many stemming from the difficulties of implementing the prince’s grand and ever-changing ideas, according to current and former employees.
His latest announcement, on Monday, was a plan within Neom for twin buildings that stretch for more than 100 kilometers and contain within them an entire city of 9 million people. Asked why he wanted to build Neom, the prince told reporters that his plan to remake Saudi Arabia involves increasing its population from around 34 million people currently to 50 million to 60 million by 2030. Half of those will be foreigners, he added, compared to the kingdom’s current demographic balance of around a third foreigners and two thirds Saudi citizens.
The capital of Riyadh will be overcrowded if it expands too much, the prince said, but “Neom will take care of 10 million.”
By 2030, he’s aiming for 1.5 million people living in “The Line” -- the twin buildings -- reaching 9 million by 2045, he said.
Neom will start engaging major potential investors by the end of this year, he said.
The kingdom also plans to invest in neighboring Egypt to complement the project, including in the tourist area of Sharm el-Sheikh, which is located across the Red Sea from Neom, he said. “We’re going to create huge investment in Egypt.”