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Public Investment Fund, the Saudi sovereign wealth fund, has completed the acquisition of a 25 percent stake in Emaar The Economic City (EEC), the master developer of the kingdom’s mega business zone on the Red Sea coast.
EEC issued new shares to PIF via a 2.833 billion riyals ($755 million) debt conversion.
"PIF’s strategic investment will provide an opportunity to leverage synergies between EEC and PIF's ecosystem in the real estate, manufacturing, logistics and tourism sectors," Reuters reported citing a statement from PIF.
EEC’s extraordinary general assembly has approved the proposal to raise the company’s capital to 11.3 billion riyals ($3 billion), a statement to the Saudi Stock Exchange (Tadawul) on Monday said.
EEC has sought extra capital through debt conversion to boost its liquidity and meet financial obligations.
The extra funding is equivalent to more than 2.8 billion riyals or 33 percent of the previous outlay of 8.5 billion riyals.
Headed by Dubai’s Emaar Properties, EEC is the developer of the King Abdullah Economic City, a master-planned city envisioned to feature 3,000 hotel rooms, 250,000 apartments and 25,000 villas spread across a 16,800-hectare site.
In a statement, EEC said the capital increase will raise the company’s shares from 850 million to more than 1.13 billion.
“The reason for the capital increase is to improve the company’s liquidity and credit position in order to provide greater solvency in relation to its financial obligations, and to improve the company’s ability to achieve its growth goals,” the statement said.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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