Prince Mohammed says huge enterprise will be listed - the first zone to float on public markets
Saudi's $500bn mega-city NEOM to be floated alongside Aramco, says crown prince
The US$500 billion mega-city planned by Saudi Arabia will be floated on financial markets alongside Aramco as part of the kingdom's drive to diversify away from oil, crown prince Mohammed bin Salman said.
Prince Mohammed's surprise announcement about the listing of NEOM, a 26,500-squarekm zone that will extend into Jordan and Egypt, is the latest and most extraordinary in a slate of privatisation programmes led by the floating of Aramco.
"The first capitalist city in the world ... this is the unique thing that will be revolutionary," said prince Mohammed.
"Without a doubt, at the end of the day NEOM will be floated in the markets. The first zone floated in the public markets. It's as if you float the city of New York."
Prince Mohammed was speaking on the sidelines of the Future Investment Initiative conference, which has attracted nearly 4,000 delegates from around the world to Riyadh this week.
Adjacent to the Red Sea and the Gulf of Aqaba and near maritime trade routes that use the Suez Canal, the zone will serve as a gateway to the proposed King Salman Bridge, which will link Egypt and Saudi Arabia.
NEOM will be fully owned by Saudi Arabia's sovereign Public Investment Fund (PIF) until its listing, and will attract investments from companies in renewable energy, biotechnology, advanced manufacturing and entertainment, the PIF has said.
"It won't be listed in the markets until the idea is mature enough," prince Mohammed said. "It might be after 2030, it might be before, but the idea and the strategy is to float it eventually."
The new city will not follow the rules and regulations enforced in the rest of Saudi Arabia, which imposes Sharia law based on a strict Wahhabi interpretation of Islam.
It will offer residents a more liberal lifestyle, allowing musical concerts and entertainment in a remote corner of the desert kingdom. Saudi Arabia has already started to relax some long-standing rules, including what was an effective ban on women driving.
Prince Mohammed said the name mixed "neo", meaning new, with M, the first letter of the Arabic word for future.
The new city is part of the crown prince's ambitious Vision 2030 plan to overhaul the economy of Saudi Arabia, Opec's largest producer, and provide jobs for an overwhelmingly young population in the face of a global oil price decline since 2014.
Prince Mohammed has portrayed the reforms as a matter of economic survival. He is confident he has the backing of most young Saudis, who make up the bulk of the population.
"I do think there is a desire within significant parts of Saudi society to move away from rigid, old-school Wahhabi control of social behaviour and the public sphere," said Steffen Hertog of the London School of Economics.
"So I don't think the crown prince’s statements are just for show. He genuinely wants to harness these sentiments and has undertaken very significant steps, including allowing women to drive and severely curtailing the powers of the religious police."
Economic growth has slowed and the economy may shrink this year as the government introduces austerity measures.
"The idea is not to restructure the economy as much as to seize the opportunities available that we didn't address before. We have high capacity and we use only a little," prince Mohammed said.
He has pledged to transform Saudi Arabia economically and socially.
"Vision 2030 is about a lot of big opportunities, so Aramco is one of them, NEOM another opportunity ... We have a lot of huge projects we will announce in the next few years."