Saudi Arabia’s Binladin International enters restructuring phase

By Rahul Vaimal, Associate Editor
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Binladin International Holding Group
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Saudi Binladin Group’s parent company, Binladin International Holding Group (BIHG) is starting on a restructuring and recapitalization program in an attempt to restore the fortunes of the largest contracting company in the Kingdom.

The government of Saudi Arabia has taken a 36.22 percent stake in the holding company through its finance ministry, with the remaining 63.78 percent held by the Binladin Company for Development and Commercial Investment. The finance ministry stake in the group will be held through a subsidiary, Istidama Holding Company.

The US-based investment bank Houlihan Lokey with restructuring experience has also been appointed to work on the group’s recapitalization.

Khalid Al Gwaiz, chief executive of BIHG said, “Through the establishment of the transformation program, we have identified and put in place the foundations necessary to carry out comprehensive due diligence to ensure the success of the ongoing recapitalization of SBG”.

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 suffered financially in recent years since the fall in oil prices in 2014, and a re-evaluation of the country’s project pipeline before the Vision 2030 strategy led to a slowdown in work.

The restructuring of BIHG will have three distinct targets and they are;

  • The first will be to re-establish its status as the national and regional construction champion of the kingdom, highlighting its “important role” in helping to achieve the goals of Saudi Arabia’s Vision 2030.
  • The second objective will be to use more of the group’s huge land bank, especially in prime places such as in Makkah.
  • And the third one would be to optimize the value of the group’s companies to reinforce current management teams, to pursue strategic alliances and joint ventures or to sell properties that are considered non-core.

Mr. Gwaiz said, “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”.

“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. BIHG is well-positioned to carry SBG’s great legacy as a national champion forward to lead this sector and capture its growth,” he further added.

In addition to Mr. Al Gwaiz’s appointment as the new chief executive of the holding company, Mr. Abdulrahman Bajunaid has been appointed chief executive of its real estate business and Mr. Samer Khawashki has been appointed as chief executive of investment.

Binladin International Holding Group (BIHG)

BIHG is a multinational construction conglomerate, which was founded in 1931 by Mohammed Binladin. The relationship of the Mohammed Binladin with the country’s founder, Abdel Aziz al Saud, led to important government contracts such as refurbishing the mosques at Mecca and Medina. Now, the group has over 100,000 employees, multiple international partnerships and a number of subsidiaries.