SABIC turns to net profit in first nine months of 2021

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Jeddah - Yasmine El Tohamy - RIYADH: The CEO of The Red Sea Development Company has refused not rule out the possibility of selling a stake in the company, or one of its subsidiaries, to the public in an initial public offering within two to five years, once the company is fully operational and stable.

“We have a number of different ideas as to how we take the business forward,” John Pagano told Arab News in an interview on Wednesday on the sidelines of the Future Investment Initiative Forum in Riyadh. “We can IPO the whole business, we can IPO parts of the business or we can look at different types of structure.

“So we could create a real-estate investment trust and sell the assets into the REIT, (and) we could own part of (the REIT) and open it up to large numbers of retail investors. I think that’s a very attractive proposition but a number of different options exist.”

The Red Sea Project is fully owned by Saudi Arabia’s Public Investment Fund, and Pagano said his company “is very well advanced” in terms of capital needs. The capital structure for the first phase of the project is already in place and the shareholder has committed the equity needed for this initial phase of development, he added.

The PIF has committed about $15 to $16 billion to the project, and last year the TRSDC was able to raise SR14.12 billion ($3.8 billion) in green bonds through a project-financing scheme for the first phase of development, Pagano said, adding: “So the Red Sea is fully capitalized.”

Talking about the recent merger between TRSDC and AMAALA, another megaproject owned by the PIF, Pagano said that they will remain distinct in terms of identity, branding and focus but will share characteristics in terms of sustainability.

“AMAALA was going to go down a different path for their own power and we’ve changed that,” he explained. “So we are going follow a similar approach with the public-private partnership to build the 100 percent renewable-energy system for them, too.

“They, too, can be sustainable and that was not the case before, so it is really leveraging opportunities where we use our respective skill set to make both destinations better.

“We will keep them distinctively apart because they are different and unique. AMAALA is very much focused on wellness and the Red Sea is much more focused on ecotourism and nature, so I think they have very separate, very different, positioning and will have to be coexist. We are not building that many hotels that I would be worried about it.”

Turning to sustainability, Pagano said that they are using the platform provided by the Red Sea Project to really drag the industry along with them.

“I think that by us doing what we doing, people will have to follow,” he added. “If they don’t follow they will not succeed because I think the consumers of today, both before and especially after COVID, are much more aware of the choices they make, and they are going to be much more aware of the environmental impact and they are going to choose to go to destinations that respect the environment, that protect the environment, that go beyond sustainability.

“We’re saying sustainability is no longer enough and we need to think about regeneration, we need to think about how to make our place better — and that is what the Red Sea is doing and we are going to do the same thing for AMAALA.”

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