[Edaily Marketin Soyoung Park Reporter] The global investment banking (IB) industry is turning its attention to the Middle East, home to the world’s largest sovereign wealth funds. “Oil Drive” is a series covering news from the Middle Eastern investment market. It covers stories of global investment firms diving into “oil money” as well as news from the Middle East itself, where countries are seeking to move away from oil dependence and focus on investments in new technologies. It also reports on South Korean companies attracting investment from Middle Eastern capital. [Editor’s Note]

Tensions in the Middle East and North Africa (MENA) region are escalating daily as the U.S.-Iran conflict drags on. Amid this turmoil, one country is steadfastly moving forward with large-scale projects: Saudi Arabia, the host of the 2034 World Cup. Despite the dual challenges of geopolitical risks and financial burdens, Saudi Arabia is quietly pressing ahead with stadium construction.

However, it appears unlikely that construction costs will be covered solely by funds from the sovereign wealth fund, which is backed by oil revenues. Unlike its past practice of pouring public funds into large-scale projects, Saudi Arabia is now pursuing strategies to attract global capital for this stadium construction.

Global capital market analysts believe Saudi Arabia’s current approach will influence future projects as well. They anticipate that the methods for financing large-scale projects aimed at realizing “Vision 2030” will become more diversified.

According to the global investment banking (IB) industry on the 23rd, “Roshn Group,” a real estate development firm affiliated with the Saudi Public Investment Fund (PIF), is seeking private investors to partner on the Aramco Stadium project. Foreign media outlets, including Reuters, reported that Roshn has selected JPMorgan as the lead underwriter for this financing.

The deal is being considered under a “lease-and-leaseback” structure. Under this arrangement, Roshn would establish a separate investment vehicle holding the lease rights to the Aramco Stadium and co-own it with investors. Investors would provide initial funding to this vehicle. They would then receive a portion of the long-term rent paid by Aramco as returns.

Reuters explained, “If Roshin successfully completes this transaction, it will be able to raise the new funds needed for the project while simultaneously freeing up its existing capital for other business ventures.”

Saudi Arabia must build or renovate 15 stadiums to host the World Cup. To this end, it is constructing stadiums in five cities: Riyadh, Jeddah, Al-Khobar, Abha, and Neom. The Aramco Stadium, which Aramco and Roshin are constructing in the Al-Khobar region, has a total capacity of 47,000 seats and is scheduled for completion this year.

Global capital market analysts cited “cost burdens” as the reason Roshin is raising private capital. Saudi Arabia has been pursuing various large-scale projects—such as Neom, Qiddiya, and the Red Sea Project—to realize Vision 2030. Much of the funding for these projects has come from the Public Investment Fund (PIF). While the PIF’s assets under management (AUM) have increased significantly, analysts suggest that the fund has reached its limit in covering costs due to the overlap between large-scale projects and its portfolio of smaller-scale initiatives.

Industry observers predict that, taking the recruitment of private investors for the World Cup stadium construction as an opportunity, Saudi Arabia will utilize a variety of methods to raise funds for future Vision 2030 projects. The outlook is that the trend of alleviating the financial burden by attracting global private capital—as seen in this case—will spread, moving away from the PIF’s traditional model of direct investment.

An investment banking industry official familiar with local conditions “Just as the United Arab Emirates (UAE) actively sought to attract global family offices, including those from South Korea, last year, Saudi officials have also visited South Korea to introduce investment opportunities ahead of major urban development projects,” adding, “Given that the local investment landscape has already shifted toward a mutually beneficial structure, the move to attract external capital for large-scale projects requiring substantial funding was a predictable next step.”