Posted on 06/17/2021
At a higher frequency, governments in the Middle East seek to consolidate public entities with the aim of reducing organizational costs and benefiting from economies of scale. The Saudi Cabinet approved the merger of two state-run pension and unemployment insurance funds into one entity with billions of local and foreign stocks. The Saudi Pensions Agency (PPA) and the General Social Insurance Organization, also known as GOSI, will merge into a single institution.
Both GOSI and PPA are major investors in Saudi companies, with their names visible in shareholder ownership rankings. They also own shares in UK companies like HSBC Holdings and AstraZeneca. Investors in pension plans also invest in bonds and real estate. There’s even an allocation to hedge funds and private equity funds by Hassana Investment Company, an investment unit of GOSI. Over 50% of PPA’s investment portfolio is in the Saudi stock market, including 67 companies and three funds. The PPA invests in more than 19 unlisted companies and in National Debt Management Center sukuk and bond issues. In 2009, the PPA formed Al Ra’idah Investment Company (RIC), a Saudi state-owned company. RIC is a player in real estate development on the Saudi market.
In 2019, UAE-based GEMS Education and Hassana formed a joint venture to develop the education sector in Saudi Arabia.
Saudi heavyweight institutional investors
This new entity will support the Saudi public institutional investor space which includes the KAUST endowment, the Saudi Central Bank, the Saudi Arabian Public Investment Fund (PIF) and Wisayah Investment Company (the manager of the pension funds massifs of Saudi Aramco). Wisayah is led by its CEO, Sheila Al-Rowaily, who started in this role in 2019. Wisayah allocates money to investment firms and invests directly in debt, equity and real assets.
