---
title: "Lenovo sets up a factory in Saudi Arabia with an initial investment of 200 million, which will be put into operation within a year"
description: "Lenovo Group recently signed a strategic cooperation agreement with Alat, a subsidiary of the Saudi Arabian sovereign wealth fund PIF, to invest $250 million in setting up production facilities in Sau"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/212472313.md"
published_at: "2024-08-25T18:36:00.000Z"
---

# Lenovo sets up a factory in Saudi Arabia with an initial investment of 200 million, which will be put into operation within a year

> Lenovo Group recently signed a strategic cooperation agreement with Alat, a subsidiary of the Saudi Arabian sovereign wealth fund PIF, to invest $250 million in setting up production facilities in Saudi Arabia. The production is expected to start within a year to establish a global supply chain center. In addition, Lenovo will establish its MEA regional headquarters in Saudi Arabia, aiming to increase the revenue share of the region from 2.7% to 10% within the next 5 years. Furthermore, Lenovo plans to issue $2 billion zero-coupon convertible bonds and 1.15 billion warrants, with the related transactions subject to approval at the shareholders' meeting

Lenovo Group (00992) signed a strategic cooperation framework agreement with Alat, a subsidiary of the Saudi Arabian sovereign wealth fund PIF, in May this year, planning to issue $2 billion zero-coupon convertible bonds to Alat. Lenovo's Chief Financial Officer, Huang Weiming, stated that Lenovo will establish production facilities in Saudi Arabia, with an initial investment of $250 million (approximately HKD 1.95 billion), aiming to start production within the next 12 months and in the long term, to develop the Saudi base into the third global supply chain center.

**Building a Global Supply Chain Center**

Huang Weiming mentioned that they are currently leveraging Alat's support to identify suitable production base locations in Saudi Arabia. In the early stages, the base will mainly serve businesses in the Middle East, with the mid-term potential to support European operations. He revealed that Alat had visited the group's factories in the mainland, hoping to replicate the intelligent manufacturing experience in the mainland at the future highly automated factories in the Middle East.

In addition to production facilities, Lenovo will establish its MEA (Middle East and Africa) regional headquarters in Saudi Arabia. Huang Weiming stated that they have already obtained relevant permits, and the regional headquarters is expected to be established soon. He reiterated that the group's goal is to increase the revenue share from the MEA region from 2.7% to 10% within the next 5 years. With Saudi Arabia reducing its reliance on oil, driving economic transformation, IT investment will increase, leading to business demand, while local clean energy supply can bring cost advantages.

The $2 billion convertible bonds will mature 3 years after issuance and can be converted into equity at HKD 10.42 per share at maturity. Lenovo also proposed to issue 1.15 billion warrants at a price of HKD 1.43 per warrant, with an initial exercise price of HKD 12.31 per share. Chairman Yang Yuanqing will subscribe to 19.1% of the warrants. The above transactions are subject to approval at the September shareholders' meeting.

Lenovo Group's Deputy Chief Financial Officer, Zheng Xiaoming, stated that the structure and pricing of the transaction are attractive, attracting long-term investors like Alat. It is expected to save $100 million in interest expenses annually over the next 3 years and avoid immediate dilution of equity.

Interview and article by: Chen Jianting

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.