JEDDAH, Saudi Arabia (Reuters) – Saudi’s Knowledge Economic City will start an initial public offering on Monday to raise 1.02 billion riyals ($272 million), the firm’s chief executive said on Saturday.
The IPO, which will offer 30 percent of the company through issuing 102 million shares, will help raise the firm’s capital to 3.4 billion riyals.
KEC is based in the holy Muslim city of Medina and is one of four economic cities the Gulf Arab country is building to diversify its economy away from oil and to provide job opportunities for its growing population of over 25 million.
“The location of the city within Medina, as a continuation to an existing economy and existing infrastructure, it will be different from the other
The offering will last until Sunday.
The firm is planning to develop 4.8 million square meters of land inside Medina and hopes to benefit from the millions of pilgrims who visit the city every year as it plans to build a station for a high-speed linking Medina with Mecca, Islam’s holiest city.
Under government plans, the new city will have 30,000 residential units and aims to attract information technology companies and health and education centres.
KEC expects to sign contracts worth approximately 700 million riyals by the end of this year and will sign on Sunday a 400 million riyal contract with U.S. firm Deep Cloud to develop a data center.
The city is expected to attract around 32 billion riyals of investment, and Bawazir does not expect the firm to need to borrow in the future.
“The financing will be generated by the income as we will reinvest some of the liquidity generated by profits,” he said.
State-owned King Abdullah Foundation, Savola Group, Taiba Investments and industrial conglomerate Bin Laden Group are among the largest share-holders in KEC.