Construction

Finance ministry to help Binladin Group pay off debts

August 2, 2024, 11:52 AM

The Jeddah Tower, previously known as the Kingdom Tower, under construction in 2019. Binladin Group is bidding for contracts on the revived project

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Saudi Arabia’s finance ministry has said it will lend Binladin Group money to pay back debts to banks. It is also considering raising its stake in the construction giant.

The finance ministry’s Al Istedamah Holding currently holds around 36 percent of Binladin Group, a private company owned by the Bin Ladin family since it was founded in the 1930s.

There had been speculation that the Public Investment Fund, which manages the $1.25 trillion Vision 2030 projects, could buy the finance ministry’s stake in the group.

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But a statement from the Saudi Press Agency said the finance ministry’s measures would include “considering raising the government’s stake in it”.

PIF has shifted strategy towards more local acquisitions as it comes under pressure to shoulder more of the costs of Saudi Arabia’s economic transformation plan amid lower oil prices.

Finance ministry support will “increase the group’s ability as one of the biggest regional companies in the sector to complete its current plans such as the holy mosques projects… and it will enable it to obtain the necessary financing,” it said.

“This is in continuation of the government support the construction sector has enjoyed in the recent period, which will aid the competition of vital projects and investment opportunities in realisation of Vision 2030”.

Binladin has been the major contractor for over a decade of expansion works around the central mosques in the Muslim holy cities of Mecca and Medina.

But it fell out of favour after a crane collapsed in Mecca during the Hajj season in 2015, killing 118 people.

In 2022 the government appointed Rothschild, the UK financial advisory company, to supervise its restructuring and reduce debt estimated to be in the range of $20-$30 billion.

It is also a partner in a project to build Jeddah Tower in Jeddah as the world’s tallest building.

Construction on the tower came to a standstill after the crane collapse but the project was revived last year with the opening of bids for its completion.

A spokesman for Binladin Group has said the company is in the running for contracts.

Binladin Group is part of a consortium that last month revamped the Alinma Jeddah Economic City Real Estate Fund with $1.8 billion (SAR6.8 billion) to help pay for the Jeddah Tower, in a further sign that the troubled project will go ahead.