Esdarat Holding Company (Esdarat), with an authorized capital of around $377 million, has launched a private placement of 600 million shares to fund its real estate project in Makkah.

The project is estimated to cost SR10.77 billion ($2.9 billion). 

The upcoming project in the centre of the holy city and is being developed by Saudi Bin Laden subsidiary, Al Makam.

The private placement, which is expected to raise over $300 million, is a Sharia’a compliant investment opportunity which offers investors attractive  returns. The company is planning an IPO in the next 12-18 months, subject to regulatory approvals, said a company official.

Commenting on Esdarat’s strategy, Issam Essa Al Asousi, board member of Esdarat said the company's long term strategy was to become an active player across all segments of the real estate market in the GCC and the wider Mena region.

'Given the strong regional economic indicators and expected growth, Esdarat believes that the real estate sector of the GCC, and the Makkah region in particular, is developing at a high annual growth rate per annum,' he added.

Commenting on the transaction, Mohammad Al Shuaib, chief executive officer of Esdarat Holding, said, 'The Makkah real estate sector, especially around the Grand Mosque, truly offers one of the most exciting opportunities in the Kingdom of Saudi Arabia, as well as across the entire region.'

'The Rawabi Abraj al Bait project that this transaction will in part fund, is unique on many levels, but more so because we are unlikely to see another development project on this scale in Makkah for some time to come.'

'Due to redevelopment of the Haram Mosque, some of the major projects in Makkah have been canceled, which means this project is even more of a rare opportunity,' he added.

Shahzad Shahbaz, CEO of NBD Investment Bank, an Emirates NBD company, which is financial advisor and lead placement agent on the deal, said, 'This is a rare investment opportunity, which is Sharia’a compliant and provides investors with exposure to the Makkah real estate sector.'

'We have had strong initial interest from investors across the Mena and South East Asia, and expect to close the transaction by the end of July. A team of syndicate banks have been appointed to cover Saudi Arabia, Qatar, Kuwait, UAE, Malaysia and North Africa,” Shahbaz added.

Dr Saleh Al Habib, chief executive officer of Jiwar Real Estate Company, said the project comprises nine towers close to Al Haram in Makkah with easy access to the holy site and will be completed in five years.

It is a ‘Build, Operate and Transfer’ for each of the 9 towers for a term of 30 Hijri years starting from the date which is 2 months from each tower’s date of delivery, he added.

The total area of Phase 1 is estimated to be around 824,270 sqm, with a net leasable area of approximately 358,196 sqm. 

The development comprises a series of hotels, residences and commercial facilities situated in the Ajiad area, 170 meters from the Holy Haram area in Mecca, providing 10,742 rooms split across 479 floors of hotel and residential space, Al Habib added.-TradeArabia News Service