Transaction brief
SIDF-backed financing for a SAR 230 million expansion in Riyadh
Structuring senior financing, a Sharia-compliant mezzanine tranche and sponsor equity for Al-Shifaa's planned sterile-injectables facility in Sudair Industrial City.
The mandate
Develop the financing strategy for a SAR 230 million greenfield facility intended to triple sterile-injectables production. The assignment required a capital structure combining SIDF senior financing, Sharia-compliant mezzanine financing and sponsor equity.
Skills and deliverables: SIDF lending, blended-finance modelling, inter-creditor negotiation, industrial feasibility, project finance, due diligence and financial due diligence.
The challenge
Target SIDF financing for up to 75% of capital expenditure while preserving the senior lender's security ranking, incorporating a mezzanine tranche, and addressing localisation and environmental requirements within an eight-month approval timetable.
Our approach
- Valuation and project modellingPrepared DCF valuation and a 15-year project model to the SIDF template, including project and equity IRRs and FX-swap scenarios.
- Senior financingDesigned a SAR 170 million SIDF senior Istisna-Ijara facility, with a 12-year tenor, a two-year grace period and a stated 3% flat margin.
- Mezzanine and equityCombined a SAR 30 million Murabaha mezzanine facility, with bullet repayment at 9% per annum matched to the start-up ramp, with SAR 30 million of sponsor equity contributed as cash and land.
- Security and covenant structureAddressed inter-creditor ranking and developed a covenant package with a minimum DSCR of 1.8x and stated LTV of 56%.
The outcome
- SIDF approval issued on day 178The approval was obtained within the eight-month project timetable.
- Funding secured ahead of the closing windowFinancing was secured six weeks ahead of the deadline.
- SAR 230 million capital structureSAR 170 million of senior financing, SAR 30 million of mezzanine financing and SAR 30 million of sponsor equity supported the planned expansion.
- Approximately 3.4% financing-charge ratioOn the supplied rate assumptions, SAR 7.8 million of annualised financing charges is approximately 3.4% of the total SAR 230 million capital base, including sponsor equity. This excludes the required return on equity and is not an effective borrowing rate or weighted average cost of capital.
- Estimated financing savingsThe project model indicated approximately SAR 11 million in interest savings compared with a pure commercial-debt alternative.
- Capacity for future investmentThe covenant package was designed to preserve headroom for growth capital expenditure through 2031.
