Gowling WLG advises Alfanar Global Development on the project development and financing of NEOM Residential Communities

3 minute read
13 June 2023

Gowling WLG's Projects Group has advised Alfanar Global Development (Alfanar), a leading Saudi Arabian construction and operations company, on the project development and financing for the construction, operations and maintenance of five Residential Communities procured by the NEOM Company.

The residential communities are the first phase of NEOM's residential communities' expansion and form part of projects totalling SAR 21 billion in value, representing one of the largest international public-private partnerships for accommodation.

The residential communities were procured on a competitive basis and our teams advised on the concession agreement, bid preparation, financing term sheets, bid clarifications, and on the negotiation and preparation of the full suite of project and finance documents after Alfanar were appointed as one of the preferred bidders.

The debt financings totalling were provided on a wholly Sharia-compliant per project basis by a syndicate of Saudi banks acting as mandated lead arrangers across each of the five Residential Communities. The five separate financings were structured across equity bridge murabaha facilities including both base and standby equity facilities denominated in SAR, senior finance istisna-ijara facilities including both base and standby facilities with tranches denominated in both SAR and USD, working capital facilities, VAT murabaha facilities denominated in SAR and Sharia-compliant equity bridge and senior facilities profit rate swaps.

Partner and Head of International Projects Jonathan Brufal (Dubai) led the multijurisdictional Gowling WLG team, alongside Partners Imran Mufti (Riyadh), who led on the Islamic financing, and Andrew Newbery (London). Associates Lillian Campion, Jamie Desmond, Rana Alassaf and Scott Geelan advised on the project documents (DBFOM, EPC, Facilities Management and Interface) whilst Dan O'Donnell advised on the finance documents (both equity bridge and senior) and Simon Elliott provided advice on corporate aspects of the deal, with support from paralegal Isabella Parkes. Gowling WLG were supported on Saudi local law aspects by AlGhazzawi & Partners. The firm entered into a co-operation agreement with the leading Saudi-based firm in 2021. Wissam Chbeir (Riyadh) led the AlGhazzawi team.

Commenting on the deal, Imran Mufti said: "NEOM is coming to fruition and these projects represent a significant step in that process. It was our pleasure to advise Alfanar on the financing of these projects, structured on a wholly Sharia compliant basis, together with AlGhazzawi & Partners out of our association offices in Riyadh where we continue to advise sponsors and lenders on infrastructure projects in the Kingdom".

Jonathan Brufal echoed these views, "We are proud to have been part of the team that delivered such a high profile and ground-breaking transaction under considerable time pressure. We are confident that it will pave the way for increased private sector participation in delivering essential infrastructure in NEOM and Saudi Arabia more widely."

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