The Finance Ministry is taking direct control of Saudi Binladin Group, upping its stake in Binladin International Holding Group — the holding company established in 2019 to manage the family's assets — to 86.38% from 36%, Asharq Business reports, citing a company statement. The massive debt-for-equity swap through a capital increase was approved by shareholders on Sunday, but the exact value remains under wraps.

Background

The move is the last act in a years-long saga to rescue the Kingdom’s most critical construction agent.

The liquidity crisis that nearly felled the Kingdom’s oldest contractor began in 2015, triggered by the infamous crane collapse incident at the Grand Mosque in Makkah that claimed over 100 lives. The immediate fallout was a ban on new contracts for several months, which was exacerbated by a crash in oil prices that forced the government to delay payments to contractors just as SBG’s balance sheets were bleeding.

How much were the group’s debts? Some USD 20-30 bn, unnamed sourced told Reuters back in 2019 when the company was looking for a financial adviser for restructuring its mounting debts. It found it later in 2020, hiring US-based Houlihan Lokey to oversee a restructuring program estimated at SAR 56.4 bn.

Gov’t to the rescue

The first real signal of a state rescue came in October 2024, when the National Debt Management Center stepped in to arrange a SAR 23.3 bn syndicated loan, shortly after the finance ministry laid out a plan to settle the group's outstanding cash dues to banks. The ministry said the plan would involve providing loans to the group and potentially increasing the government's stake.

“This initiative is designed to enhance the Binladin Group's ability to complete its ongoing projects, particularly those related to the Holy Mosques,” FinMin said back then.

Why it matters

Helping a vital private sector player the size of Binladen get their ducks in order — instead of being paralyzed by bankruptcy courts or liquidity crises — is always a good idea. The Kingdom is racing against a ticking clock to deliver infrastructure for Expo 2030 and the 2034 World Cup, while the construction sector is facing a capacity crunch. A Binladen collapse would also threaten tens of thousands of jobs.

Bankers can also sleep better: Local banks held significant exposure to the group — which Binladin International Holding Group CEO Khalid Al Gwaiz estimated at 70-80% of the total debt back in 2021.

What’s next? Pundits see the move triggering major new project announcements and board changes over the coming weeks.

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