Saudi Arabia-domiciled reinsurer, Saudi Reinsurance Co., is raising new capital via the issuance of new shares that will be purchased by Saudi Arabia’s Public Investment Fund (PIF), a sovereign wealth fund, according to a filing with the stock exchange.
On October 7th, Saudi Re signed a non-binding memorandum of understanding (MoU) with PIF. Under the agreement, PIF will subscribe to new cash shares in Saudi Re by way of capital increase while suspending preemptive rights of the current shareholders.
The reinsurance company confirmed that the sovereign fund plans to subscribe to cash shares, representing a significant minority stake, at a price of SR16 ($4.27) per share.
Al Rajhi Capital and GIB Capital were mandated as advisors for Saudi Re and the Kingdom’s sovereign wealth fund, respectively.
The transaction is subject to the conclusion of the subscription agreement by Saudi Re and PIF. It is also conditional on the absence of any change in the CEO position or any other position in Saudi Re’s executive management.
The Riyadh-based company emphasized that the subscription agreement’s terms and conditions will encompass obtaining all necessary regulatory approvals, including approvals from the Capital Market Authority and the Saudi Central Bank.
The statement also notes that the two will cooperate to negotiate in good faith to enter into the subscription agreement.
The MoU will expire within three months from the signing date unless extended by prior written agreement of both parties or upon the execution of a legally binding subscription agreement between both parties.
Alternatively, the MoU may be terminated by prior written agreement of both parties or after 15 days from the date of PIF providing written notice to Saudi Re of its intention to cease negotiations and discontinue the proposed transaction.
Saudi Re stated that the financial impact will be announced in due course.
