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Tue 4 Dec 2007 05:15 PM

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RAKISA reduces paid-up capital for economic city

Company will reduce its initial paid-up capital by SR2.5 billion to be SR5 billion.

Abdullah Ibrahim Al-Rakhis, Chairman of RAKISA Holding the lead developer of the Prince AbdulAziz bin Mousaed Economic City (Hail Economic City) in Saudi Arabia, told Saudi reports while attending the Riyadh Economic Forum that his company will reduce its initial paid-up capital by SR2.5 billion to be SR5 billion ($1.3 billion), slashing the stake of each founding member by 50%.

Al-Rakhis said the decision came after Singapore’s Jurong Consultants, the newly appointed city designing firm, discovered that the early stages of construction do not require the construction of a SR2.2 billion power plant.

RAKISA was working out a three-phase investment scheme with US giant General Electric (GE) to develop the infrastructure of the city over 10 years.

Under the pervious scheme, the first phase presents a three-level scheme in which a total of SR6.4 billion will be invested in infrastructure (including SR2.2 for the city’s energy requirements) and SR30 billion ($8 billion) in business projects within seven years, generating more than 30,000 employment opportunities.

GE executive director for infrastructure accounts Magued Eldaief told arabianbussiness.com that his company did not reach any final deal concerning the development of the city’s infrastructure.

Al-Rakhis said that the excess capital will go back to founding members before offering 30% of its capital in an initial public offering (IPO). RAKISA was planning for going public in the first quarter of 2007; however, the company said that the “unpleasing” stock market conditions forced it to postpone the IPO to a later date.

RAKISA said that 2.5% of the offering will go to the poor people in Hail province, north of capital Riyadh.

RAKISA Holding is the main developer to the SR 30 billion ($ 8 billion) economic city. RAKISA heads investment consortium that is developing Hail Economic City. The consortium is made up of companies from Saudi Arabia, Kuwait, Bahrain and the UAE.

Prince AbdulAziz bin Mousaed Economic City is envisaged to be the Middle East’s largest logistics and transportation hub.

Proposed to be developed entirely with private funds over a period of ten years, Hail Economic City is envisaged as an integrated commerce and industry hub stretching across 156 million square metres of land in the kingdom’s north.

Once complete, the project will boast an international airport, rail link, dry port and operations centre, and a supply chain centre within the logistics zone. Hail Economic City is projected to generate employment for 55,000 people and contribute to the doubling of Hail’s GDP in the next decade.

The City is being built in the kingdom’s strategically located, fertile and mineral-rich northern province of Hail.

Saudi Investment authority SAGIA and RAKISA launched the “360 degrees investment opportunities program”, which provides investors with profiles for around 360 investment opportunities that Hail Economic City offers.

The city will be developed in three phases over 10 years. The first phase is planed to provide 30,000 employment opportunities.

In the second phase of Hail Economic City, another SR9.8 billion will be invested in infrastructure and SR48 billion in the other sectors to create 66,000 jobs.

The third phase will witness a SR13.7 billion infrastructure investment coupled with a SR67 billion investment in other sectors, catalyzing an expected 119,000 new jobs.

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