NEOM and DSV have announced a USD 10 billion exclusive logistics joint venture to support the development of ambitious projects in NEOM, Saudi Arabia. The partnership will focus on providing logistics services for NEOM in the coming years. Under the agreement, the joint venture will provide end-to-end supply chain management, development and investments in transport and logistics assets and infrastructure, and transport and delivery of goods and materials within NEOM.
Nadhmi Al-Nasr, CEO of NEOM, said, “The projected demand in both construction and non-construction logistics will make NEOM one of the largest customers in the world, and this partnership allows NEOM to create value from its demand. Working alongside one of the world’s leading logistics companies, the joint venture with DSV will build on expertise and know-how to drive innovation and sustainability throughout the logistics value chain. The economic benefit of this partnership will provide tens of thousands of jobs and enable growth to capture local and regional market share. It’s a living example of Saudi Vision 2030, fostering job creation and building a future-leaning economy.”
NEOM will hold 51% of the joint venture, with DSV holding 49%.
NEOM envisions unparalleled demand for construction logistics through 31 December 2031, with sustained growth in non-construction logistics. In addition to impacting the logistics landscape, the venture is expected to boost the Saudi economy through infrastructure development and create more than 20,000 job opportunities.
Jens Bjørn Andersen, Group CEO of DSV, added, “NEOM is one of the world’s largest and most complex projects. It provides a unique opportunity for DSV to support development at the forefront of innovation, technology and digital transformation. DSV already has a strong presence in Saudi Arabia, which is a significant growth opportunity for us in the region; we look forward to working with NEOM Company and bringing our logistics capabilities to the table.”
NEOM and DSV are committed to driving innovation. They will allocate a portion of the JV’s revenues to foster the development of ground-breaking technologies and commercialise new sustainable next-generation logistics solutions. The vision extends further by establishing a dedicated innovation centre at NEOM’s clean and advanced manufacturing hub, Oxagon.
The new joint venture is a significant milestone demonstrating NEOM’s commitment to revolutionising Saudi Arabia’s logistics sector. It paves the way for pioneering sustainable logistics solutions, marking a new chapter in its journey towards realising Vision 2030. Completion of the partnership is awaiting customary regulatory approvals, which are expected to be obtained in the second quarter of 2024.
Financial impact for DSV
The business plan for the joint venture is expected to require a USD 10 billion gross investment. In accordance with the business plan, the total shareholder funding commitment up and until 31 December 2031 is USD 5 billion. NEOM and DSV commit to funding to realise the business plan pro rata to their shareholdings. It is expected that the return on invested capital will be in line with DSV’s existing target. The joint venture is not expected to have any material financial impact on DSV for the financial year 2023.
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