Saudi Arabia’s Public Pension Agency (PPA) has hired the local unit of HSBC to help sell The King Abdullah Financial District, the financial hub in Riyadh, to the Public Investment Fund (PIF).

The fund, Saudi Arabia’s main investment vehicle, is offering to acquire the troubled financial centre for less than the PPA’s investment into the project, according to news agency Bloomberg, which cited unnamed sources as saying. It is understood that total investment into the project had reached SR31bn ($8.27bn) by May 2014. The PPA currently fully owns KAFD through its Al-Rayadah investment arm, MEED reported in May.

The two government controlled firms have not reached a final deal yet and the offer could change. PIF is being advised by US’ JPMorgan.

The financial district has been affected by construction delays since the project took off ten years ago. It was first emerged in May that the government was weighing plans to transfer ownership of the troubled financial hub to PIF.

It is understood the move is an attempt to rescue the project and inflating domestic portfolio of the PIF. According to the government’s Vision 2030 plan, it also plans to directly connect KAFD to King Khaled International Airport in Riyadh, as well as turn it into a special zone with “competitive regulations and procedures”, and visa exemptions, MEED reported earlier.

The 1.6 million square-meter financial hub is about 70 per cent complete, and the developer is struggling to lease the space. In an attempt to make the project more successful, the government plans to repurpose some of the built-up areas and change the real estate mix, increasing the allocation for residential accommodation, services and hospitality areas.

The KAFD was originally envisaged as a modern financial hub that would bring banks, financial-services firms, auditors and lawyers as well as the kingdom’s stock exchange and capital-market authority into one area. Five central buildings, including the district’s tallest at 76 floors, will be surrounded by dozens of offices, apartments, hotels, conference centers and entertainment venues.

Any potential deal would not adversely affect the pension fund’s stakeholders, a Public Pension Agency spokesman said, declining to discuss commercial details of the proposed agreement. The Public Investment Fund and JPMorgan declined to comment while a spokesman for HSBC didn’t immediately respond to the news agency’s request for comment.

PIF, earlier this month denied media speculation that it plans to sell its holdings in the local companies.

The fund is at the heart of the kingdom’s economic diversification plan announced earlier in the year. Riyadh plans to float about 5 per cent of the Saudi Aramco, the world’s biggest oil exporter, on the local and an international bourse and transfer the rest of company’s ownership to PIF. The move is aimed at inflating the size of PIF assets to about $2 trillion, which it will leverage to invest at home and abroad and generate investment income, a much needed alternative revenue line for the kingdom’s hydrocarbon-based economy.

The PIF has already made major investments in US online transportation firm Uber and the new Middle East e-commerce site Noon. It has also agreed to start a $100bn technology fund with Japan’s Softbank Group Corporation and is considering increasing its stake in local power developer Acwa Power to up to 35 per cent.