Saudi Re inks deal to boost capital by $71 million

Saudi Re inks deal to boost capital by $71 million | Insurance Business New Zealand

Reinsurance

Saudi Re inks deal to boost capital by $71 million

New shares will represent 30% of the company’s capital

Reinsurance

By
Kenneth Araullo

Saudi Reinsurance Co has announced plans to raise its capital by SR267.3 million (US$71 million) through a strategic subscription agreement with the Public Investment Fund (PIF), aimed at bolstering its financial position.

The binding subscription agreement will see Saudi Re increase its capital from SR891 million to SR1.15 billion. This will be accomplished through the issuance of 26.73 million new ordinary shares, each valued at SR10, according to a recent stock exchange filing.

The new shares, representing 30% of the company’s current capital, will be fully subscribed by PIF at a subscription price of SR16 per share, resulting in a total subscription amount of SR427.68 million.

Following the capital increase, PIF will hold a 23.08% ownership stake in the company.

The agreement, initially outlined in a non-binding memorandum of understanding on Oct. 8, 2023, and extended on Dec. 25, 2023, for an additional six months, highlights the expanding business landscape within the Kingdom.

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

This capital increase, as per the reinsurer, aligns with Saudi Arabia’s Vision 2030 goals, which include promoting a robust investment climate, economic diversification, and strengthening the Kingdom’s insurance sector.

The finalization 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. Al Rajhi Financial Co. is serving as the financial advisor to Saudi Re, while GIB Capital is advising PIF on the transaction.

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

In a press statement, PIF said the deal will enable MEPCO to expand its production, enhance operational efficiency, and contribute to environmental sustainability.

This move also aligns with PIF’s sustainability goals and reflects its commitment to fostering environmentally responsible practices in the acquired company.

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