Diriyah Company, the developer turning the historic Saudi city into a tourism giga-project, is considering an initial public offering on the Tadawul stock exchange by early 2027, as the kingdom seeks to develop non-oil sectors and attract international tourists.
The company is already generating revenue of 50 million Saudi riyals ($13.3 million), which it expects to "at least double" in 2024, after it opened substantial assets in 2022 and attracted more than one million visitors to the historic siteof Al Turaif District, said Jerry Inzerillo, group chief executive of Diriyah Company.
Diriyah Company, which is a subsidiary of the Public Investment Fund, would list 100 per cent of its shares if it proceeds with the offering.
"We've hired lawyers and bankers ... we're putting the preliminary structure in place to evaluate what we have to do over the next short period of time to build up to an IPO that could be listed on the Saudi stock exchange," he said on the sidelines of the World Travel and Tourism Council's global summit, in Rwanda.
“We hope that within 36 months we’ll have a realistic window.”
In January, Saudi Arabia’s sovereign wealth fund designated Diriyah as its fifth giga-project after the Neom, Red Sea, Qiddiya and Roshn developments.
The $63.2 billion project at Diriyah is set to transform the site into a major tourism destination.
Diriyah, the kingdom’s first seat of power, was built from mud bricks along the banks of Wadi Hanifa, north-west of Riyadh.
Diriyah, home to the Unesco World Heritage Site of At-Turaif, is the birthplace of the kingdom and the ancestral home of Al Saud royal family. On this site, the First Saudi State was established in 1727. The settlement of Diriyah, which dates back to 1446, was home to generations of leaders.
By 2030, the mixed-use destination will span 14 square kilometres and is set to house 42 hotels, more than 100 restaurants, nine museums and about 30,000 homes.
It is also expected to create 178,000 direct jobs and contribute 70 billion riyals directly to the national gross domestic product by the end of the decade, according to the PIF.
As part of its Vision 2030 strategy to diversify its economy away from oil, Saudi Arabia is seeking to attract more international tourists and become a global travel destination.
It aims to increase the contribution of the tourism sector to the kingdom's economy to 10 per cent by 2030, up from 3 per cent in 2019.
The kingdom expects to attract about 100 million domestic and international visitors this year, with the tourism sector contributing almost 6 per cent to its GDP in 2023, Tourism Minister Ahmed Al Khateeb said in October.
The country is also aims to attract 70 million overseas visitors a year by 2030, with the government investing billions of dollars in new tourist attractions, resorts, entertainment, new carrier Riyadh Air and the new King Salman International Airport in Riyadh.
“We have several projects now that are not only on time and on budget, but are showing great promise," Mr Inzerillo said.
"At some particular point it’s going to be a big return. The PIF is a fund so we’re fortunate because it’s very rare in the world that natural and cultural heritage projects have good ROI [return on investment] like us."
He said the sales pitch to investors was entry into a G20 market with robust demand, a population of more than 30 million and the introduction at Diriyah of a "desirable commercial product".
"You’ve got these gigantic events that will infuse $1 trillion of capital from the public and private sector into Riyadh alone," Mr Inzerillo said.
The hospitality industry veteran dismissed any effect on the Diriyah project's future plans from global supply chain bottlenecks and labour shortages.
"We feel things are going extremely well," he said.
"Right now in November of 2023, remarkably, we're slightly ahead of schedule. If you do a snapshot of what I promised the King and the Crown Prince, we're six months ahead of schedule."
The project hired 27,000 construction workers, which will increase to 31,000 by the end of the year, and 2,000 staff. About 85 per cent of its workforce are Saudi citizens, 38 per cent are Saudi women and 14 per cent are from Diriyah.
Asked about the effect of the Israel-Gaza war on project progress and visitor numbers, Mr Inzerillo said: "We know the Crown Prince [Mohammed bin Salman] is working unbelievably hard on trying to find a peaceful solution to the region ... but our instructions are: 'We'll handle the diplomatic side of what's happening in the region, you focus on the goals of Vision 2030 and take care of what you're mandated to do.' So we have our marching orders."
The Diriyah Company will "open, ground-break and announce projects" In December every year until 2030, he said.
Next month, it will undertake a soft opening of its first hotel of 141 rooms.