Prime Highlights
- KAFD secured a SAR12 billion ($3.2 billion) Murabaha facility, its first independently secured debt financing.
- The funding will support ongoing development and expansion of Riyadh’s financial district.
Key Facts
- The financing has a 15-year tenure and was backed by a syndicate of 10 banks.
- KAFD has been owned by Saudi Arabia’s Public Investment Fund since 2018.
Background
King Abdullah Financial District Development and Management Company (KAFD DMC) has successfully raised SAR12 billion ($3.2 billion) worth of senior-secured Murabaha financing facility, which is the company’s first independently secured debt facility. It also happens to be one of the largest financings ever done for real estate development backed by the private sector in Saudi Arabia.
This 15-year financing facility was sourced from a consortium of local and regional banks. Al Rajhi Capital acted as structuring advisor, while ten financial institutions participated in the financing.
KAFD said the funding will support ongoing development across the district, including the enhancement of existing assets and delivery of future projects. The company further highlighted that it will add more diversity to the company’s financing and help it carry out long-term strategic plans effectively.
The financial structure was raised after the KAFD had transformed itself over the past several years since it was acquired by Saudi Arabia’s Public Investment Fund (PIF). The area has now become one of the most important hubs for multinational companies, investors, and residents within the city.
John Pagano, Managing Director of KAFD DMC, expressed his satisfaction at the transaction, which he considered a sign of faith in the strategy and success of the area. Ibrahim AlSughayer, Chief Financial Officer of KAFD, pointed out that the facility would help promote development priorities and ensure KAFD’s role in promoting the economic development of Riyadh.
As reported by Al Rajhi Capital, the high demand from potential lenders made the order book oversubscribed, reflecting the belief in the strength of KAFD’s business model and its strategic importance for Saudi Arabia’s Vision 2030 program.
Thus, the new structure will be instrumental for the future growth of KAFD.
