Saudi Arabia's Public Investment Fund (PIF) is working with Lazard on funding options and a potential initial public offering of Masar, a $27 billion mega project in the holy city of Mecca, two sources with direct knowledge told Reuters.

The kingdom's sovereign wealth fund, which has over $600 billion in assets, is working with the U.S. financial advisory on Masar, and several other projects including the $500 billion economic zone NEOM, said the sources, declining to be named as the matter was not public.

The PIF, Lazard and Masar did not respond to a Reuters query for comment.

Bloomberg first reported Lazard was advising the sovereign wealth fund on NEOM.

Lazard has been scouting for deals in the kingdom ever since it poached Citigroup Saudi Arabia's chief executive Wassim Al-Khatib, who played a key role in Aramco's record $29.4 billion initial public offering in 2019.

Masar's IPO plan was slated for next year, but the time horizon may be shifted as it is still in the early stages and the size or value of the deal is yet to be determined, one of the sources said.

Masar is a 1.2 million square metre urban development project in the western part of Mecca.

The project is being developed by Umm Alqura for Development and Construction, a private company with investors that include the PIF, Ministry of Finance, Public Pension Agency, the General Organization for Social Insurance, and the General Authority of Awqaf.

Masar says its development is in alignment with Vision 2030, a programme introduced by Crown Prince Mohammed Bin Salman to wean the kingdom's economy off oil revenues and lure foreign investment to establish new sectors and spur job creation.

Pilgrimage is big business for Saudi Arabia, which has Islam’s two holiest sites in Mecca and Medina, and is the backbone of plans to also expand visitor numbers under the crown prince's ambitious economic reform agenda.

Masar's developer expects to receive 80 percent of Mecca visitors.

The crown prince in April last year issued a royal decree that unified four title deeds for Masar, which Umm Alqura's chief executive Yasser Abuateek said marked the first step towards Masar's initial public offering.

The unified title deeds replaced all the title deeds of the 3,626 properties on which the project is based, which Abuateek said was an effective mechanism and a regulatory tool for authorities to address the obstacles facing mega projects.

(Reporting by Hadeel Al Sayegh;Editing by Elaine Hardcastle)