Investments in Saudi maritime sector exceeds $6.7bn, says top official

RIYADH: Saudi contractor Umm Al Qura for Development and Construction Co. is proceeding with an initial public offering on the main market to fund its SR100 billion ($26.6 billion) Masar Destination in Makkah.

According to a statement, the Capital Market Authority approved the company’s IPO application, allowing it to issue 130,786,142 new stocks, representing 9.09 percent of its post-capital increase shares.

Spanning 3.5 km, Masar is designed as a multi-use destination that will offer a variety of hospitality, residential, retail, and commercial spaces. The project will feature 41,000 keys across hotels, serviced apartments, and 9,000 residential units for sale.

“The net proceeds of the offering will be utilized to fund costs associated with land settlements, infrastructure, activation of the Masar destination and project financing expenditures; in addition to other general corporate expenditures, such as those relating to sales, marketing, administrative, operating and financing,” the statement said.

Masar’s retail and commercial elements will cover over 330,000 sq. meters, including a major shopping mall and retail centers. Additionally, the development will include a hospital, a mosque, office spaces, and transport infrastructure to enhance mobility and accessibility within Makkah.

Chairman of Umm Al Qura, Abdullah Saleh Kamel, said: “I am deeply grateful to our wise leadership for their efforts in supporting the development of Makkah in alignment with Vision 2030’s goals to accommodate the growing number of pilgrims and visitors.”

He added: “Our IPO offers institutional and retail investors a highly compelling opportunity to invest in the development of Masar, a landmark project in the Kingdom. As we look to the future, our listing will be a key step in executing our strategy to maximize shareholder value.” 

Yasser Abuateek, CEO of Umm Al Qura, emphasized that the firm was established in 2012 to enhance Makkah’s urban and investment landscape through Masar. 

“As we prepare to list on the Saudi Exchange, we are ready to begin a new era of accelerated growth, delivering against the ambitions of Vision 2030 to transform the residents and visitor experience in Makkah,” he said.

Abuateek described the IPO as “a vote of confidence” in the company’s track record of growth to date, as well as its “commitment to building state-of-the-art urban destinations that create unparalleled experiences.”

Umm Al Qura’s major shareholders include the Public Investment Fund, the General Organization for Social Insurance, and Dallah Al-Baraka Holding. 

Masar is set to become another major destination for residents and visitors, with 99.77 percent of the key infrastructure work already completed.

As of June 30, the company holds a strong financial position, with a capital base exceeding SR13.1 billion and additional bank facilities of over SR14 billion. The IPO is expected to attract significant interest from investors, given Makkah’s growing importance as a global religious and tourism hub.

RIYADH: The Saudi Electricity Co. will settle its historical obligations to the state, totaling SR5.687 billion ($1.5 billion), following an executive panel approving a final settlement of the disputed legacy amounts.

The panel, which included a ministerial committee for restructuring the electricity sector and SEC, said the disputed amounts are related to technical discrepancies in quantities, prices, and handling costs of fuel and electric power.

A working team was formed from the ministries of energy and finance and the Saudi Electricity Regulatory Authority, in coordination with relevant authorities, to study the disputed transactions totaling SR10.3 billion.

This is part of the government’s continued efforts to enhance service levels for citizens and residents, supporting the goals of Saudi Vision 2030.

Global credit ratings agency Moody’s assigned the SEC an Aa3 rating in November, which it gives to companies with high quality, low credit risk, and a strong ability to repay short-term debts. It provides an assessment of the creditworthiness of borrowers, including governments, corporations, and other entities that issue debt.

The Tadawul statement said the committee issued a second resolution to include the settlement liability amount in the Mudaraba instrument, as per the terms of the agreement between SEC and the Ministry of Finance, within 30 days of receiving the resolution letter from the Minister of Energy.

The Mudaraba instrument is a long-term, unsecured financial tool with a profit margin tied to the regulatory weighted average cost of capital. Its profit is paid only if dividends are declared on ordinary shares. It follows Islamic Shariah principles, is treated as equity in SEC’s financials, and does not change shareholder ownership or rights.

The bourse filing said the SEC expects no significant impact on its dividend distribution.

It added that following the resolution, SEC will amend the Mudaraba agreement with the Ministry of Finance to include this amount in the Mudaraba instrument, bringing the total to SR173.607 billion.

Reclassifying the settlement amount into the Mudaraba instrument strengthens the company’s capital and prepares it for large-scale investments, reinforcing its role as a reliable electricity provider in the Kingdom.

The financial impact of the resolution is projected to be reflected in the 2024 financial statements.