Saudi Public Investment Fund expands reach: Saudi Reinsurance Co. boosts capital by $71 million

Dubai: Saudi Reinsurance Co. intends to bolster its financial standing by increasing its capital by $71 million (Dh260.7 million) through a strategic subscription agreement with the Public Investment Fund (PIF).

The agreement, finalised on July 4, will elevate the capital of Saudi Arabia's first reinsurance firm from $237.5 million (Dh872 million) to $306.5 million (Dh1.12 billion). This enhancement involves issuing 26.73 million new ordinary shares valued at $2.67 (Dh9.81) each, as detailed in a recent stock market filing.

The new shares, constituting 30 per cent of the company's current capital, will be exclusively subscribed by PIF at $4.27 (Dh15.68) per share, resulting in a total subscription of $114 million (Dh418.7 million). Post-transaction, PIF will hold a 23.08 per cent ownership stake in the company.

Originally outlined in a non-binding memorandum of understanding in October last year, and extended until December, this agreement underscores the Kingdom's thriving business climate.

The capital increase, supported by PIF, fortifies Saudi Reinsurance’s financial resilience and market competitiveness. It also aligns with Saudi Arabia's Vision 2030 objectives, promoting economic diversification and strengthening the insurance sector.

The Saudi Vision 2030, which is a programme launched by the government in 2016, with the main aim of diversifying its economy away from the oil sector. It has three main pillars - a vibrant society, a thriving economy, and an ambitious nation.

Earlier this year, PIF expanded its stake in Middle East Paper Co. (MEPCO) to 23.08 per cent through a similar capital injection. In a statement, PIF highlighted that this investment aims to boost MEPCO's production capabilities, operational efficiency, and environmental sustainability, aligning with PIF's commitment to responsible corporate practices.