Saudi Crown Prince Mohammed bin Salman announced on Monday that his $500 billion centerpiece project NEOM, a massive industrial zone that would eventually contain nine million people, will be partially funded by an IPO planned in 2024.

The first phase of the city will cost 1.2 trillion riyals ($319 billion), with half of that coming from the kingdom’s sovereign wealth fund, the Public Investment Fund, he said.

On Monday, the crown prince addressed reporters, architects, investors, and others while attending a presentation on The Line project, a vital component of the NEOM development.

Saudi Arabia will approach sovereign wealth funds in the region and globally in the fourth quarter of this year to raise a portion of the remaining 600 billion riyals, which will also be funded by private sector investment and an IPO in 2024, he said.

Saudi Arabia will also set aside 300 billion riyals for a fund tied to NEOM that will invest in enterprises who establish themselves there.

In 2017, the crown prince revealed NEOM intentions as part of his Vision 2030 reform plan, which intends to diversify Saudi Arabia’s economy away from oil.

The kingdom’s sovereign wealth fund is a key investor in NEOM, a 26,500-square-kilometer (10,230-square-mile) high-tech development on the Red Sea that includes industrial and logistical zones.

The crown prince stated that NEOM will have a capacity of 450,000 people by 2026 and 1.5-2 million people by 2030, finally accommodating nine million people by 2045. He stated that the interim goal would be to create the metropolis larger than Abu Dhabi.

When asked why the development was necessary, he stated that it was critical to Saudi Arabia’s ambitious population-growth targets and capacity to compete globally.

“NEOM will add a trillion riyals to the Saudi stock market value. At least 1.2 trillion in the beginning and the overall will increase after project completion to exceed 5 trillion,” he was quoted as saying on state-owned al-Ekhbariya TV.

During the presentation for The Line, he stated that Saudi Arabia’s stock exchange intended to be one of the three largest in the world.

According to Refinitiv statistics, IPOs in the Middle East and North Africa raised more than $13.5 billion, largely in the Gulf, in the first half of this year, with the majority in Saudi Arabia.

The Line is envisioned as a succession of 200-metre-wide “modules” for various urban uses wedged between two 500-metre-high, 170-kilometer-long mirrored outside facades that cut through a broad assortment of desert and mountains. There will be suspension bridges, gardens, and perhaps a stadium.

The comparatively compact design, which aims to run entirely on renewable energy, is intended to reduce waste and environmental effect. According to the crown prince, its position provides “perfect” conditions for harnessing wind and solar energy.

Saudi Arabia, the world’s largest crude exporter, is aiming for “net zero” greenhouse gas emissions by 2060.

The crown prince promoted NEOM as a new way of life in cities, eliminating cars and allowing citizens to feel more connected to nature.

“If you have money”, he said, you should “raise the bar” and create something innovative and different.

“Since we are doing it from nothing, why should we copy normal cities?” he added.

“I believe it’s going to be the best liveable area – by far – in the whole planet.”

Source: Reuters

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