Logo of the Public Investment Fund (PIF)
The Public Investment Fund (PIF) and Emaar The Economic City (Emaar EC) announced today, Sept. 27, the completion of an investment deal, under which the sovereign wealth fund becomes a major shareholder in the company with a 25% stake, after obtaining the necessary approvals.
The deal was completed after transferring part of the loan obtained by Emaar EC from the Ministry of Finance, worth SAR 2.8 billion, to the PIF in exchange for the issuance of new shares in the company.
The transaction will contribute to the development of multiple collaborations between the company and the fund's corporate system, particularly, in the real estate, manufacturing, logistics and tourism sectors. This promotes attractive long-term returns for the fund and shareholders, PIF said in a statement.
The investment deal is expected to contribute to the development of Emaar EC by strengthening the role of King Abdullah Economic City (KAEC) as a key enabler for social, economic and tourism development in the Kingdom.
The investment deal will also focus on maximizing and unlocking the capabilities of promising non-oil sectors, supporting the Kingdom's efforts to diversify sources of income, increase strategic and operational value, and improve basic infrastructure.
On Sept. 26, shareholders of Emaar EC approved the board’s recommendation on increasing capital through converting SAR 2.83 billion debt owed by the company to the PIF, according to data compiled by Argaam.
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Details of Capital Hike via Debt Conversion |
|
|
Current Capital |
SAR 8.5 bln |
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Number of Shares |
850 mln |
|
Percentage of Increase |
33% |
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Capital after Increase |
SAR 11.33 bln |
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Number of Shares after Increase |
11.33 mln |
|
Increase Value |
SAR 2.833 bln |
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Objectives of Capital Hike |
- Settling the debt owed by the company to the PIF and converting it to 283.33 million ordinary shares for the fund. - Improving the company’s liquidity ratios and credit position in order to provide greater solvency in relation to its financial obligations and improve its ability to achieve its growth goals. |
The following table shows public and creditor ownership before and after debt conversion:
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Public and PIF Ownership |
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Shareholders |
Before Debt Conversion |
After Debt Conversion |
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Number of Shares (mln) |
Ownership (%) |
Number of Shares (mln) |
Ownership (%) |
|
|
Public Investment Fund |
-- |
-- |
283.33 |
25.00% |
|
Public |
431.29 |
50.74% |
431.29 |
38.05% |
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