A construction site in Riyadh with the SBG-built Al Faisaliah Tower in the background. The company has built many of the kingdom's landmarks. Waseem Obaidi for The National
A construction site in Riyadh with the SBG-built Al Faisaliah Tower in the background. The company has built many of the kingdom's landmarks. Waseem Obaidi for The National
A construction site in Riyadh with the SBG-built Al Faisaliah Tower in the background. The company has built many of the kingdom's landmarks. Waseem Obaidi for The National
A construction site in Riyadh with the SBG-built Al Faisaliah Tower in the background. The company has built many of the kingdom's landmarks. Waseem Obaidi for The National

Parent company of Saudi Binladin Group outlines new business plan


Michael Fahy
  • English
  • Arabic

Binladin International Holding Group, parent company of Saudi Binladin Group, is embarking on a restructuring and recapitalisation programme in a bid to revive the fortunes of the kingdom's biggest contracting company.

Saudi Arabia's government, through its finance ministry, has taken a 36.22 per cent stake in the holding company, with the remaining 63.78 per cent owned by the Binladin Company for Development and Commercial Investment. Houlihan Lokey, a US-based investment bank with an expertise in restructuring, has also been appointed to work on the group's recapitalisation.

“Through the establishment of the transformation programme, we have identified and put in place the foundations necessary to carry out comprehensive due diligence to ensure the success of the ongoing recapitalisation of SBG," Khalid AlGwaiz, chief executive of BIHG, said in a statement on Tuesday.

Saudi Binladin Group has a 90-year history in the kingdom and has worked on many of its most prestigious projects including the extension of the Holy Mosque in Makkah, King Abdullah Financial District, Princess Norah University and Al Faisaliah Tower in Riyadh, the expansion of King Abdulaziz International Airport in Jeddah and the building of King Abdullah Economic City near Rabigh on the Red Sea coast.

The company has struggled financially in recent years since the drop in oil prices in 2014 and a reassessment of the kingdom's project pipeline ahead of the drawing up of its Vision 2030 strategy led to a slowdown in work.

Contract awards in Saudi Arabia dipped from 250 billion riyals in 2015 to just over 100bn riyals per year for the next three years, before recovering last year with 197bn riyals of new awards, according to US-Saudi Business Council data.

BIHG's restructuring will have three clear objectives, it said. The first will be to re-establish its position as the kingdom's national and regional construction champion, highlighting its "vital role" in helping to realise Saudi Arabia's Vision 2030 ambitions. Second will be to use more of the group's huge land bank, particularly in prime locations such as in Makkah. The third objective will be to maximise the value of businesses within the group, strengthening existing management teams, exploring strategic partnerships and joint ventures or selling off assets deemed to be non-core.

Alongside Mr AlGwaiz's appointment as the holding company's new chief executive, Abdulrahman Bajunaid has been named chief executive of its real estate business and Samer Khawashki has been appointed as chief executive of investments.

“We remain mindful that this roadmap is by no means an easy feat. However, we are also confident in the collective expertise of our leadership and operational teams, as well as those of the global consultants we have enlisted as valued counsel," said Mr AlGwaiz.

“Saudi Arabia is amongst the largest in the GCC with regards to the size of the infrastructure and construction industry, with more than $825bn worth of planned and unawarded contracts," he said. "BIHG is well positioned to carry SBG’s great legacy as a national champion forward to lead this sector and capture its growth."

The finance ministry's stake in the group will be held through a subsidiary, Istidama Holding Company.

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