As the Kingdom accelerates the development of its fledgling tourist industry, it has decided to merge two government-owned developers working on its Red Sea tourism project into a single organization to minimize costs and increase synergies.
On the country’s west coast, the Red Sea Development Company (TRSDC) and Amaala, both owned by the Public Investment Fund, are developing adjacent mega projects. But to boost efficiencies, they will shortly be merged under the ‘Red Sea Group,’ according to John Pagano, the chief executive of both companies. “What it allows us to do is to leverage our synergies between the two projects. It allows us to leverage the skillsets within both organizations for the betterment of both projects, and we’re in the final stages of that being formalized. We at TRSDC are a good year or more ahead of where they (Amaala) are, and so all the lessons we’ve learnt we apply them over there and vice versa.”
Deal to combine TRSDC and Amaala is in final stages, Chief Executive of both companies John Pagano says
Mr Pagano said Amaala, an ultra-luxury wellness destination, plans to raise between five billion Saudi riyals ($1.3 billion) and ten billion riyals ($2.7 billion) in 2022 to help fund the first phase of the project. “We will probably come to market next year with Amaala. It will be conventional senior debt secured against the assets that we’re building and the eventual income produced by those assets, which will then service the debt.”
Amaala plans to raise between five billion Saudi riyals ($1.3 billion) and ten billion riyals ($2.7 billion)
TRSDC, which raised 14 billion riyals in green financing earlier this year, will use the debt market to fund its succeeding phases, although there is no capital requirement for the first phase at this time. “For subsequent phases, depending on the timing, we will come back to the market, “Pagano said. “It’s a mix of equity and debt to get the right balance.”
In the next 18 months, the company will award another 18 billion riyals in contracts when it begins building hotels and an airport. To keep up with the increased workload, the company plans to add around 700 new staff over the next 12 months.
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