Edmond de Rothschild to run funding vehicle for Saudi projects

Reuters/Denis Balibouse

• Venture with Saudi firm SNB
• Local office to open later this year
• Waiting on regulatory approval

The Edmond de Rothschild Group is establishing a funding vehicle for infrastructure projects in Saudi Arabia along with the local firm SNB Capital, as part of a deal in which the Swiss investment bank will set up offices in the country. 

Saudi Arabia’s massive economic diversification programme has run into financial obstacles as it faces three years of budget deficits with oil below breakeven price and lower than expected foreign direct investment. 

“Edmond de Rothschild is seeking to establish a new infrastructure debt fund platform designed to play a crucial role in financing infrastructure projects across Saudi Arabia, in line with the country’s Vision 2030 programme,” the bank said in a statement, describing it as a joint venture with SNB Capital. 

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Separately, Rothschild said it was setting up a joint venture with Watar Partners to offer services to Saudi family offices and institutional investors. A local office will open in the second half of 2024, for which Saudi nationals will be hired. 

The statement said the plans were awaiting regulatory approval and licensing. 

• Rothschild’s Saudi office signals vote for Riyadh

• Rothschild move confirms the new allure of Riyadh

• King Abdullah Financial District helps grow FDI

Foreign companies now need to establish regional headquarters in Saudi Arabia for access to any government contracts worth at least SAR1 million ($270,000). 

But foreign and local banks are also being pressed to step up to provide funding for the Public Investment Fund-owned giga-projects at the heart of the Saudi reforms. 

The Anglo-French Rothschild & Co said in February it had opened an office in the King Abdullah Financial District to offer advisory services including mergers and acquisitions, debt advisory and restructuring and private equity. 

Edmond de Rothschild

Major banks in the government’s good graces stand to win contracts servicing bond issuances, as government entities and private banks raise debt. Saudi Arabia’s public debt is still relatively low, at 26.5 percent of GDP in 2023. 

Saudi Arabia’s Capital Markets Authority is considering scrapping a 5 percent withholding tax on interest payments to corporate bondholders to encourage more foreign investment.