Saudi’s PIF invests $1.3bn in four local construction companies

The transactions are part of the fund’s strategy to enable the kingdom’s strategic sectors

February 15, 2023

Saudi Arabia’s Public Investment Fund (PIF) announced an investment worth $1.3bn in four local construction companies, as part of its strategy to enable key strategic sectors.

The fund subscribed to new shares as part of the capital increases representing “significant minority stakes”, in four local contractors. These include Nesma & Partners Contracting Company, ElSeif Engineering Contracting Company, AlBawani Holding Company, and Almabani General Contractors Company.

#PIF announced an investment reaching USD 1.3 billion—representing significant minority stakes—in four leading construction companies: Nesma & Partners, ElSeif, Al Bawani and Almabani.

Read more: https://t.co/xdiybwW4Xh pic.twitter.com/xKBDMOB90t

— Public Investment Fund (@PIF_en) February 14, 2023

The investment aims to improve local supply chains for projects in Saudi Arabia as part of developing its construction ecosystem.

“These partnerships demonstrate PIF’s commitment to unlock the capabilities of key strategic sectors in Saudi Arabia, including the construction & building components and dervices sector, which has been identified as one of 13 strategic sectors locally,” said Yazeed A. Al-Humied, deputy governor and head of MENA investments at PIF.

‘’PIF’s investment in four national champions will support local capacity expansion across the sector and stimulate private sector participation and investment to meet current and future demand, in line with Vision 2030.”

The fund will enable the four companies to develop regional and international partnerships, which would underpin the adoption of latest technologies as well as knowledge transfer from global EPC (engineering, procurement, and construction) firms.

PIF, one of the world’s largest sovereign wealth funds, with $620bn in assets under management, has made a string of announcements in recent months.

It acquired a 30 per cent stake in district cooling firm Saudi Tabreed as well as partnered with US-based sustainable agriculture company AeroFarms to build indoor vertical farms in Saudi Arabia and the broader region.

Also read: Saudi’s PIF partners with AeroFarms to build indoor vertical farms across MENA

The fund also announced the launch of its local content growth programme in October last year, which aims to leverage its spending to catalyse innovative sectors in the country.

In 2021, PIF’s portfolio companies awarded SAR140bn worth of contracts to local private sector firms, nearly 60 per cent of which went to the construction materials and services, information technology and telecommunications, and financial services sectors.

Contracting companies

Established in 1981, Nesma & Partners is a contractor in Saudi Arabia offering services in industrial, oil and gas, civil and buildings, infrastructure, and electro-mechanical fields. Its clients include Aramco, Sabic, KAUST, The Red Sea Development Company, NEOM and Saudi Electricity Company, among others.

“We welcome the partnership with PIF and are proud to be working together to help deliver the development and diversification goals of the local economy,” commented Abdulaziz Al Turki, chairman of Nesma & Partners Contracting Company.

El Seif Engineering Contracting Company is involved in the construction of high-rise towers. Its projects include Riyadh’s Kingdom Tower, several towers at King Abdullah Financial District, as well as buildings in Dubai, Doha and Beirut.

“The investment will support the growth and development of the sector and will contribute to scaling up capacity and private sector local content, enabling us to deliver world-leading projects in the country as we strive to become the leading player in the sectors in which we operate,” noted Khaled El Seif, chairman of El Seif Engineering Contracting Company.

Contracting corporation AlBawani Holding Company was established in 1991 and has over SAR9bn worth of ongoing projects, according to its website. Its clients include Aramco, Royal Commission for Riyadh City, Sabic, Riyad Bank, Riyadh Airports, Saudia Cargo, and stc.

“The construction services sector is of significant importance to the Saudi economy, and we believe that PIF’s contribution and investment into this sector will help support the realisation of Vision 2030’s ambitious projects,” added Fakher AlShawaf, chairman of AlBawani Holding Company.

Jeddah-based Almabani General Contractors Company was established in 1972.

“Our vision is to build projects that contribute to the welfare of society, and we look forward to working with PIF to help play our part in delivering key projects vital to the realization of Vision 2030,” said Youssef Nehme Tohme, chairman of Almabani General Contractors Company.