Updates Financing MBS's $500 Billion Desert Dream,Saudi Arabia has announced for the first time how it plans to finance Neom — the Crown Prince’s flagship megaproject that is seen as a showpiece to transform the kingdom’s economy.
The first phase of the project, which runs until 2030, will cost 1.2 trillion riyals ($320 billion), with about half of that covered by the Public Investment Fund, Crown Prince Mohammed bin Salman said. Officials will seek to raise another 600 billion riyals from other sovereign wealth funds in the region, private investors in Saudi Arabia and abroad, and the rest will be funded by an initial public offering of Neom itself on the Saudi stock market — an idea the prince first floated in 2017.
It also will set aside 300 billion riyals for an investment fund tied to Neom, MBS said.
The kingdom is working on of one of the largest and most difficult construction projects in history, which involves turning an expanse of desert the size of Belgium into a high-tech city-region called Neom.
MBS bills Neom as a showpiece that will transform Saudi Arabia’s economy and serve as a testbed for technologies that could revolutionize daily life — as well a way to attract foreign investment and diversify the oil-dependent economy. But five years in, Neom has been plagued by setbacks, many stemming from the difficulty of implementing the prince’s grand and ever-changing ideas, according to current and former employees.
Saudi Arabia also plans to build a wafer-thin megacity a hundred miles long in the middle of Neom, and have it be a nice place to live that accommodates 9 million people, with a transit system capable of sending them end-to-end in 20 minutes, MBSsaid.
The city, called The Line, takes the shape of two parallel buildings with mirrored surfaces, rising 500 meters (1,640 feet) above sea level — taller than the Empire State Building — and stretching horizontally for more than 100 kilometers. The Line was initially described as a series of walkable communities close to nature in 2021, but it has since transformed into the current idea to build a megastructure that makes up the entire city, with gardens and parks along the inside.
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Chart of the Week
Flush with cash from a commodity boom, the Gulf region’s biggest sovereign funds are pouring billions of dollars into global deals, playing funders of last resort for companies in a volatile market.
Flush With Cash
The biggest Gulf funds have over $3 trillion in assets
Source: Global SWF
The region’s largest sovereign wealth funds have been involved in at least $28.6 billion worth of acquisitions outside the Middle East and Africa this year, according to data compiled by Bloomberg. That’s the most for any corresponding period on record.
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The Slant
When OPEC+ meets on Wednesday, the oil producers will not have a clear policy to rubber stamp for the first time in a year. While the group is being asked to pump more crude and help combat soaring inflation, Russia will not let that happen, Julian Lee writes for Bloomberg Opinion.
Also Read: Libya’s Oil Production Recovers to Pre-Blockade Level
Need to Know
Turkey's central bank raised its year-end inflation forecast to 60.4% from 42.8% in April, citing the rising cost of imports and a weak lira. Governor Sahap Kavcioglu faced rare public criticism over policies that exporters are warning may threaten one of the economy's engines.
Moscow is transferring money for a $20 billion nuclear plant in Turkey, alleviating concerns war sanctions could delay the project. Meanwhile, Russia's state-run Rosatom said the project is on time despite changing the lead contractor.
Saudi Aramco agreed to buy Kentucky-based Valvoline’s petroleum unit for $2.65 billion to expand its refining and petrochemicals operations.
An investment vehicle for Saudi Arabia's AlRajhi family has become the biggest shareholder in Israeli mobility intelligence company Otonomo Technologies.
Abu Dhabi’s Aldar Properties is buying four commercial towers valued at $1.2 billion from Mubadala Investment in a deal that's among the biggest real estate transactions in the UAE.
Adnoc bought privately-owned ZMI Holdings as the UAE's main energy company looks to bolster its offshore oil, natural gas and wind businesses.
Multiply Group is taking a break from pure technology investments.
The holding company, which has a $882 million warchest, will instead focus on "more solid income-recurring sectors.”
Coming Up
- OPEC+ meeting: Aug. 3
- Turkey’s July CPI inflation: Aug. 3
Final Word
Dubai's over-the-counter crypto exchanges are emerging as a favorite for Russians, Iranians and others as bank rules and sanctions tighten.
The trading shops allow customers to buy crypto assets back home with local currency and sell them for hard cash in Dubai — without much of a paper trail.
Clients include ordinary folks dabbling in crypto or navigating capital controls, as well as sanctioned Russians who've flown to Dubai for big transactions, sources say.
These crypto trading shops are also facilitating luxury real estate deals.
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