The Red Sea Project achieves Green Financing accreditation thanks to standard setting approach to regenerative tourism
Riyadh: The Red Sea Development Company (TRSDC), the developer behind the world’s most ambitious regenerative tourism project, announced today that it has closed a SAR 14.120 billion (USD 3.76 billion) term loan facility and revolving credit facility with four Saudi banks.
Banque Saudi Fransi, Riyad Bank, Saudi British Bank and Saudi National Bank acted as Mandated Lead Arrangers. HSBC served as Green Loan Coordinator on the transaction.
Green Financing accreditation was awarded due to TRSDC’s market leading approach to social and environmental sustainability and the Red Sea Project’s international recognition as a green project. The financing is the first Riyal-denominated credit facility to receive Green Financing accreditation.
“The scale of this project is unmatched anywhere in the world and we are setting new standards in regenerative tourism at every turn. By applying a unique approach to design, utilizing 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,” said John Pagano, CEO of TRSDC.
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 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’s (LMA) respectively. The framework enables TRSDC to issue green loans and other green financial instruments and allows TRSDC to identify, select, manage and report on eligible projects and assets in line with principles. DNV provided an independent, Second Party Opinion on TRSDC’s Green Finance Framework, confirming its alignment with these internationally recognized principles.
Through this credit facility, the four participating banks are demonstrating their Environmental, Social and Governance (ESG) credentials, while TRSDC is able to establish itself as a world-leader in sustainable development.
“We aim to lead the international luxury tourism industry’s transformation into a more sustainable model, including environmental and social sustainability. 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,” said Mr. Pagano.
The Red Sea Project has already passed significant milestones and work is on track to welcome the first guests by the end of 2022, when the international airport and the first hotels will open. Phase one, which includes 16 hotels in total, will complete in 2023.
Upon completion in 2030, The Red Sea Project will comprise 50 resorts, offering up to 8,000 hotel rooms and more than 1,000 residential properties across 22 islands and six inland sites. The destination will also include luxury marinas, golf courses, entertainment and leisure facilities.
The Red Sea Development Company (TRSDC – www.theredsea.sa) is a closed joint-stock company wholly owned by the Public Investment Fund (PIF) of Saudi Arabia. TRSDC was established to drive the development of The Red Sea Project, a luxury, regenerative tourism destination that will set new standards in sustainable development and position Saudi Arabia on the global tourism map.
The project is being developed over 28,000 km2 of pristine lands and waters along Saudi Arabia’s west coast and includes a vast archipelago of more than 90 pristine islands. The destination also features sweeping desert dunes, mountain canyons, dormant volcanoes, and ancient cultural and heritage sites. The destination is designed to include hotels, residential properties, leisure, commercial and entertainment amenities, as well as supporting infrastructure that emphasizes renewable energy and water conservation and re-use.
Activity for the first phase of development is well underway and is on track to be completed by the end of 2023. The project has surpassed significant milestones, with over 500 contracts signed to date, worth more than SAR 15 bn ($4bn).
The 100-hectare Landscape Nursery, which will provide more than 15 million plants for the destination, is now fully operational. There are more than 7,000 workers currently on-site and 80km of new roads are now complete. The Construction Village which is set to house 10,000 workers will be fully open by the end of Q1 this year and development is progressing well at the Coastal Village, which will be home to around 14,000 people who will work at the destination.