The Red Sea Development Company (TRSDC) secured 14.12 billion Saudi riyals ($3.76bn) in funding through the first locally-denominated Green Financing credit facility.
The developer raised the capital through term loan and revolving credit facilities from four banks in Saudi Arabia to fund construction of the multibillion-dollar tourism project on the west coast of the kingdom, it said in a statement on Tuesday.
Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank were part of the financing deal.
“This is another milestone for the Red Sea Project and Vision 2030,” Jay Rosen, chief financial officer at TRSDC, said. “This financing adds another level of credibility by having the banks support the project. With a fully secured capital structure our project will become more attractive to investors.”
The Green Financing accreditation granted to the project shows it is in line with a framework set out by the International Capital Markets Association and the Loan Market Association's Green Loan Principles and Green Bond Principles, the statement said. HSBC acted as green loan co-ordinator on the transaction.
The green funding framework allows TRSDC to issue more green loans and other debt instruments. It also strengthens the participating lenders' environmental, social and governance credentials, the company said.
Saudi Arabia is developing several ecologically-focused mega projects to develop its tourism industry as part of efforts to reduce its reliance on oil and diversify the economy. It seeks to attract foreign direct investment – a central plank of the kingdom's Vision 2030 economic reform agenda – into tourism and leisure projects across the kingdom.
TRSDC's masterplan covers a 28,000 square kilometre site containing 90 islands. Set to welcome its first visitors by the end of 2022, the project is expected to be completed by 2030. It will house 50 hotels containing 8,000 rooms, a luxury marina, entertainment and leisure facilities upon completion.
The company, which is owned by the kingdom’s Public Investment Fund, is developing 16 hotels with 3,000 rooms across five islands and two inland sites as part of the first phase that will be delivered by 2023. This phase is expected to cost up to 29bn riyals to finish.
“The scale of this project is unmatched anywhere in the world and we are setting new standards in regenerative tourism at every turn. It is this pioneering approach that has helped us secure the first ever riyal-denominated green finance credit facility,” said John Pagano, chief executive of TRSDC.
The project has already achieved significant construction milestones, with more than 500 contracts worth 15bn riyals signed so far, the company said.
In January, TRSDC picked Dublin-based DAA International to operate the project's international airport. The group’s international airport management business will provide airfield and terminal operations, aviation services, facilities management and commercial activities. DAA International already operates Terminal 5 at King Khalid International Airport in the kingdom’s capital, Riyadh.
The entire transport network at the Red Sea development site, including the airport, will be powered by renewable energy. Acwa Power will provide 100 per cent renewable energy for phase one under a public-private partnership agreement.