Saudi Arabia gave a first glimpse into the pursuit of merging two funds, pension and insurance, with a plan to compete with the world’s largest investors.
The new merged entity will have assets of more than $250 billion, according to Saad Al-Fadhli, CEO of Hassana Investment Company, the investment management arm of the Kingdom’s General Organization for Social Insurance, who said in an interview that “insurances” will merge with the Public Pension Agency in a move that would reduce costs and help increase investment returns, according to Bloomberg.
In his first public comments to determine the size of the new sovereign entity, he said: “The merger will enhance the position of the fund, support performance, and place the General Organization for Social Insurance as one of the 10 largest investors in retirement plans in the world.”
He explained that the merger will give a great benefit in terms of helping to manage relationships, costs and negotiation, so it helps in many aspects that will improve returns.
Saudi Arabia is taking steps to merge and restructure various entities, as it looks to boost efficiency as part of a plan to diversify the economy away from oil. It is also building its sovereign wealth fund to increase its reach and influence, as the government has laid out a plan to grow its assets to more than $1 trillion by 2025.
Diverse wallet محفظة
The merger of the General Organization for Social Insurance (GOSI) and the Pension Fund (PPA), which was announced last week, will create a fund that not only owns large stakes in Saudi companies, but also owns a global portfolio that includes shares worth $204 million in AstraZeneca, and $171 million dollars at HSBC Holdings Plc.
Domestic assets also include a combined $8.7 billion ownership in Saudi National Bank, and a $4.3 billion stake in Al Rajhi Bank, according to data compiled by Bloomberg. Portfolios also include real estate and bonds.
Currently the world’s largest public pension fund, Japan’s government pension investment fund has $1.7 trillion in assets, according to data provider Global SWF. It is the tenth largest fund, the New York State Mutual Fund, with assets of $255 billion.