KSU President Abdullah Al-Othman, center, and Y.K. Jeon, president of Digm, left, sign an investment agreement with Abdullah Al-Amoudi of MIDROC in Riyadh on Wednesday. (SPA)
JEDDAH: King Saud University (KSU) in Riyadh announced Wednesday that it was able to mobilize funds for its $500 million car manufacturing company within 48 hours after it signed an agreement with a South Korean firm on Sunday to set up the company.
Mowakaba for Industrial Development & Overseas Commerce (MIDROC), which is owned by prominent Saudi businessman Mohammed Hussein Al-Amoudi, has offered to invest $275 million, 55 percent of the new companyâ€™s capital. Riyadh Valley, a KSU affiliate, will have a 15 percent stake while South Koreaâ€™s Digm Automotive Technologies will have 30 percent.
Abdullah Al-Othman, president of KSU, on Wednesday signed an agreement with a representative of MIDROC, for the investment deal. The three founders have, however, agreed to sell 30 percent of their shares to the Public Investment Fund, the Pensions Fund, the GOSI Fund and the University Education Fund.
The new Ghazal Car Technology and Spare Parts Co. will manufacture low-cost cars at prices ranging between SR35,000 and SR45,000. However, the KSU chief said about 70 percent of its activities would focus on making spare parts considering the huge market for it in Saudi Arabia and neighboring countries.
â€œWeâ€™ll sign an agreement with a Saudi consulting firm to conduct a detailed feasibility study for the new company in order to complete its registration process,â€ Al-Othman said. The new company is to start is activities shortly after obtaining required funds. KSU has deposited $187 million in the new companyâ€™s account.
Speaking about the universityâ€™s investment projects to generate funds for its various programs, Al-Othman said KSU mobilized SR450 million through its research chairs while its endowment fund has got SR3.7 billion worth of investments.
â€œWe have been making an annual revenue of SR500 million,â€ the president said. â€œOur strategic aim is to generate our own funds to finance our academic programs and other projects,â€ he pointed out. He said the new automobile company, which is to market Saudi cars in the Gulf and North Africa, would help the university add value to the research works its engineers had done for designing and developing Ghazal-1. â€œWe want to make KSU the Kingdomâ€™s gateway to a knowledge economy,â€ the president said.
Al-Othman disclosed Riyadh Valleyâ€™s plan to establish five more companies. â€œWe may convert Ghazal into a holding company at a later stage to expand its investment base,â€ he said. He said MIDROC decided to invest in the new company after it was convinced of its economic feasibility.
Abdullah Al-Amoudi, representative of MIDROC, said the new company would create more jobs for Saudi youth. â€œThe feasibility study about Ghazal is very encouraging and this is a fact that prompted us to join as one of the companyâ€™s founding partners.â€
Y.K. Jeon, president of Digm, said his company had conducted a study on markets of the region and found that Saudi Arabia has all the success factors to establish a car manufacturing company. He said the new company would make quality car at an affordable price.