Saudi Reinsurance's Strategic Partnership with Public Investment Fund Takes Shape

Saudi Arabia's Public Investment Fund (PIF) has taken a significant step forward in its strategic financial moves by entering into a non-binding agreement with Saudi Reinsurance Co.

The agreement pertains to the subscription of new cash shares issued through a capital increase, as officially disclosed via a filing to the bourse.

In this milestone development, Saudi Reinsurance Co. has stated that the subscription of these new cash shares will come into effect while temporarily suspending the preemptive rights of the existing shareholders.

The agreement underscores the sovereign fund's intent to subscribe to these cash shares, which would grant them a noteworthy minority stake in the reinsurance company.

The agreed price for each share in this transaction is set at SR16 (equivalent to $4.27).

In the financial advisory capacity, Al Rajhi Capital has been enlisted to advise the reinsurance company, while GIB Capital assumes the role of adviser to the sovereign fund.

It's crucial to note that the terms and conditions of the subscription agreement are comprehensive and will incorporate the imperative step of obtaining all requisite regulatory approvals.

This includes endorsements from the Capital Market Authority and the Saudi Central Bank.

Another significant aspect of this development is the necessity to seek approval from Saudi Reinsurance Co.'s shareholders, a step that will be undertaken during an extraordinary general assembly.

The collaboration between the company and the sovereign fund will be pivotal in the negotiation of the subscription agreement.

Notably, all material developments related to this proposed transaction will be made available to the public in accordance with pertinent laws and regulations.

The memorandum of understanding (MoU) that underpins this agreement is set to remain in force for a period of three months from the date of signing, unless both parties, Saudi Re and the fund, mutually agree to an extension or upon the execution of a legally binding subscription agreement.

Alternatively, the MoU can be brought to an end through prior written agreement between both parties or after 15 days from the date when PIF provides written notice to Saudi Re regarding its intention to discontinue negotiations and cease pursuing the proposed transaction, whichever transpires first.

Crucially, the execution of the proposed deal hinges upon Saudi Re and PIF successfully entering into a subscription agreement.

This signing, in turn, is contingent on the attainment of the necessary internal approvals from PIF.

It's noteworthy that this entire transaction is conditional upon the stability of the CEO's position and other executive positions within Saudi Reinsurance Co.

Saudi Reinsurance Co. stands as a joint stock company, having been established in 2008 as the Kingdom's pioneering reinsurance firm.

This significant agreement marks a momentous move in the financial landscape, further cementing PIF's active role in shaping the future of Saudi Arabia's investments and financial endeavors.

Source: Arab News