Saudi Arabia: The Red Sea Development Company (TRSDC), the firm behind The Red Sea Project, has secured a $3.76 billion green finance credit facility with four Saudi banks and HSBC serving as coordinator.
The Red Sea Project is a luxury, regenerative tourism scheme spanning 28,000 kilometres-squared on the west coast of Saudi Arabia. It includes an archipelago of more than 90 islands and the destination is designed to include hotels, residential properties, leisure, commercial and entertainment amenities.
Upon completion in 2030, it will comprise 50 resorts offering 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. The first phase of development which includes 16 hotels in total is on track to be completed in 2023.
The green finance loan facility was awarded due to TRSDC’s approach to social and environmental sustainability and the project’s recognition as a green development. The financing is the first Riyal-denominated credit facility to receive green financing accreditation.
Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank acted as mandated lead arrangers, with HSBC serving as green loan coordinator on the transaction.
“The scale of this project is unmatched anywhere in the world and we are setting new standards in regenerative tourism at every turn,” said John Pagano, CEO of TRSDC. “By applying a unique approach to design, utilising more sustainable methods of construction and using groundbreaking technology, we are not only reducing our impact on the environment but helping to deliver on our commitment to achieve a 30 percent net conservation benefit by 2040. It is this pioneering approach that has helped us secure the first ever Riyal-denominated green finance credit facility.
“We aim to lead the international luxury tourism industry’s transformation into a more sustainable model, including environmental and social sustainability,” he continued. “This green finance classification is the latest proof that we are setting new standards in ecotourism and showing the industry that things can be done in a different way both here in the Kingdom, and globally.”
The green financing accreditation is governed by a green financing framework aligned with the Green Bond Principles (2018) and Green Loan Principles (2020) set out by the International Capital Markets Association (ICMA) and the Loan Market Association (LMA) respectively. The framework enables TRSDC to issue green loans and other green financial instruments, and to identify, select, manage and report on eligible projects and assets in line with the principles.
Jay Rosen, chief financial officer at TRSDC, said: “This is another milestone for the Red Sea Project and Vision 2030, and we are pleased to have secured our debt financing and capital commitment for our initial phase. This financing adds another level of credibility by having the banks support the project. With a fully secured capital structure our project will become more attractive to investors.”
The Red Sea Development Company is a closed joint-stock company wholly owned by the Public Investment Fund of Saudi Arabia. It was established to drive the development of The Red Sea Project which to date has signed over 500 contracts worth more than $4 billion.
