Saudi Arabia gave a first glimpse of the ambition behind the merger of two of its pension and insurance funds, with plans to compete with the world’s largest investors of its kind.
According to the chief executive officer of Hasna Investment Company, the investment management arm of the state’s social insurance organization, the new entity will claim assets of more than $250 billion. GOSI, as the fund is known, will combine with the public pension agency in a move that will reduce costs and help increase investment returns, Hassan CEO Saad al-Fadli said in an interview.
“The merger will strengthen the fund’s position, enhance performance, and position GOSI as one of the world’s top 10 pension plan investors,” he said, in the first public comments to put out a figure on the size of the new state. for investors.
“Scale is a benefit that helps with relationship management, cost management and negotiation, so it helps in many aspects that will improve returns,” he said.
Saudi Arabia is taking steps to merge and restructure various entities as it seeks to boost efficiency as part of a plan to shift the economy away from oil. It is also creating its own Sovereign Wealth Fund to increase its reach and influence. The government has outlined a plan to increase its wealth to over $1 trillion by 2025.
diversified portfolio
The GOSI and PPA merger, which was announced last week, would create a fund that not only holds large stakes in Saudi companies, but also a global portfolio that includes $204 million in AstraZeneca plc and $171 million in HSBC Holdings plc. shares are included.
Household assets include a combined $8.7 billion in Saudi National Bank and $4.3 billion in Al Raji Bank, according to data compiled by Businesshala. His portfolio also includes real estate and bonds.
Al Fadli said the fund will review investment strategy as part of the merger process. “The returns have been really good, and we expect that to continue,” he said, refusing to give details.
Hassan has meanwhile joined a consortium of investors with the US’s EIG Global Energy Partners and China’s Silk Road Fund, which are paying $12.4 billion to acquire a 49% stake in Aramco Oil Pipelines Company.
According to data provider Global SWF, the largest public pension fund in the world is currently the Government Pension Investment Fund of Japan, with assets of $1.7 trillion. The 10th largest fund – the New York State Common Retirement Fund – has assets of $255 billion.
https://www.bloomberg.com/news/articles/2021-06-20/new-giant-saudi-pension-fund-aims-to-crack-world-s-top-10-ranks
