Saudi’s PIF boosts stake in Saudi Re with $114m investment

Saudi Arabia’s Public Investment Fund (PIF) is set to increase its stake in Saudi Reinsurance Company (Saudi Re) to 23.08 per cent through a SAR427.68m ($114.02m) investment.

The move comes as part of a binding subscription agreement signed between the two entities on July 4.

Saudi Re plans to raise its capital by SAR 267.3m ($71m) through this strategic subscription agreement with PIF, aimed at enhancing its financial position.

The kingdom’s first reinsurance company will increase its capital from SAR891m to SAR1.15bn by issuing 26.73 million new ordinary shares, each valued at SAR10.

The new shares, representing 30 per cent of the company’s current capital, will be fully subscribed by PIF at a subscription price of SAR16 per share, resulting in a total subscription amount of SAR427.68m.

This transaction will give PIF a 23.08 per cent ownership stake in Saudi Re following the capital increase.

Saudi Re announce the signing of a shareholder subscription agreement with the Public Investment Fund “PIF”. For more details:https://t.co/sYtlDqeMZl#SaudiRe

“إعادة” توقع اتفاقية اكتتاب مع صندوق الاستثمارات العامة.

لتفاصيل أكثر:https://t.co/z1La0I8KKQ#إعادة_السعودية pic.twitter.com/Dt7gkXaY86

— Saudi Re (@saudire) July 7, 2024

The finalisation of the capital increase is subject to approvals from regulatory bodies, including the Insurance Authority, Capital Market Authority, Saudi Stock Exchange, and the company’s Extraordinary General Assembly.

Upon completion, Saudi Re will appoint three PIF-nominated members to its board of directors.

Saudi Re’s capital increase, supported by PIF’s subscription, enhances its financial strength and competitive position.

The move aligns with Saudi Arabia’s Vision 2030 goals, promoting a robust investment climate, economic diversification, and bolstering the kingdom’s insurance sector.

Al Rajhi Capital and GIB Capital are serving as financial advisors for Saudi Re and the sovereign fund, respectively.

PIF’s broader investment strategy

Earlier this year, the kingdom’s sovereign wealth fund raised its stake in Middle East Paper Co to 23.08 per cent through a similar capital infusion.

In other news, the sovereign fund recently signed a non-binding memorandum of understanding to invest $500m in Hong Kong Chaoshang Group, an investment holding company. The investment comprises $100 million in five-year convertible debentures and $400m in a five-year loan, with negotiations on the terms set to be finalised within three months, the Hong Kong-listed company said in a statement.

The deal aims to bolster Chaoshang Group’s working capital and support its business expansion, potentially into industries like mining and healthcare.

This move is part of PIF’s strategy to diversify its global holdings, following its increased stake in Chinese e-commerce giant Alibaba and investments in Pinduoduo and BeiGene earlier this year.

Read: Saudi Arabia’s wealth fund PIF swings to $36.8bn profit in 2023