Riyadh financial district project to be shifted to PIF

Saudi Arabia is to transfer ownership of Riyadh’s King Abdullah Financial District to the Public Investment Fund (PIF) from the Public Pension Agency (PPA), according to four sources aware of the matter.

The move is an attempt to rescue the project, started a decade ago with the aim of making the Saudi capital a global financial center, and is another example of the burgeoning power of the PIF, which the Kingdom wants to make the world’s largest sovereign wealth fund.

A new approach to the project was outlined in the Vision 2030 package of economic reforms which called for transforming the district into “a special zone that has competitive regulations and procedures, with visa exemptions.”

It called for a direct link to the international airport, and increasing the real estate and hospitality facilities in the zone to create an “integrated and attractive living and working environment.”

The PIF has reportedly chosen JPMorgan as its adviser on the transfer and a feasibility study is currently being undertaken, according to two of the sources, which among other things will establish a valuation of the district and how much compensation will be paid to the PPA.

The PPA governor wasn’t immediately available for comment when contacted by Reuters on Monday. Senior representatives of the PIF and KAFD did not immediately respond to requests for comment.

Construction of the King Abdullah Financial District began in 2006, with skyscrapers set to house banks and the financial regulator across a 1.6-million-square-meter planned area — roughly four times the size of London’s Canary Wharf.

Vision 2030 said the KAFD had been conceived “without consideration of its economic feasibility” and without making the necessary efforts to convince the financial community to invest.