Saudi Arabia's Red Sea project seeks loan in excess of 10 bln riyals-CEO

Red Sea Development Co, which is backed by Saudi Arabia's sovereign fund PIF, is seeking a loan of more than 10 billion riyals ($2.67 billion) from four to five local banks to finance tourism projects, its chief executive John Pagano said.

Saudi Arabia plans to develop resorts on 50 islands off the Red Sea coast, offering a nature reserve, coral reef diving, and heritage sites. In an interview with Reuters on Tuesday, Pagano said the loan, which was the subject of discussions with capital markets, would fund the development of the business along with equity provided by PIF.

He said financial documents were expected to be ready by the first quarter of next year. The Red Sea Development Co plans to create a special economic zone with its own regulatory framework, entry visas, relatively relaxed social norms, and improved business regulations.

ALCOHOL NOT ON AGENDA Pagano, a former senior executive at London’s Canary Wharf development, said that while western dress would be acceptable on the islands, alcohol would "not be on the agenda".

The Red Sea plans to build the first phase of the project, which is expected to attract 300,000 tourists a year, by 2022. It is targeting 800,000 to 1 million visitors annually once the whole development is complete, Pagano said. The company is also seeking a public-private partnership (PPP), where third parties will invest in the design, building, and operation of utilities to support tourism on the islands.

"We have 4 different consortia bidding for that PPP project, three of them are international," Pagano said, adding that the company has requested proposals be submitted in January, with a view to closing the process by the end of the first quarter of 2020. Red Sea is one of three major projects backed by the PIF, along with the $500 billion NEOM economic zone and the Qiddiya entertainment project.

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