Saudi Arabia’s Public Pension Fund GOSI Breaks Into Global Top 10

Saudi Arabia’s Public Pension Fund GOSI Breaks Into Global Top 10

Serving more than 10 million members, the Kingdom’s public pension fund is now the world’s eighth biggest by assets under management, eclipsing CalSTRS and higher than previous estimates that put the merged entity at US$250-293 billion. It is also bigger than some regional sovereign wealth funds, such as Abu Dhabi’s ADQ and Mubadala, and is more than 40% of the size of Saudi Arabia’s US$730 billion Public Investment Fund (PIF).

Hassana has drawn on the expertise of other public pension funds with prominent board-level hires including the former CEO of the Netherlands’ PGGM Eloy Lindeijer and the former Chief Risk Officer of Singapore’s sovereign wealth fund GIC, Cheng Sung. Other prominent members of the world of institutional investment are former Warburg Pincus CEO Joseph Landy. Other top appointments are dominated by Saudi nationals who have held leading positions within the Kingdom’s industrial and financial sectors, overseen by CEO Saad Al Fadly.

Saudi Arabia made the decision restructure of its social insurance and pension system in 2021 by creating a new merged entity. The drive towards consolidating the social welfare system chimes with Saudi Arabia’s Vision 2030, which aims to develop and diversify the economy and provide economic security for future generations. This has involved the creation of “national champions” with a singular focus – in this case, social welfare. Hassana manages regional investments directly, while its international investments are externally managed by partnering with the world’s leading long-term global asset managers.

The combination of Hassana and Raidah has created a diverse portfolio of domestic and foreign assets, across more than 100 markets – although heavily weighted to fixed income which will comprise 50% of its AUM, according to research by Global SWF. Following an analysis of the portfolios of both constituent funds pre-merger, we found that around 17% of capital was in public equity with real estate, infrastructure, and private equity each representing 10% and the rest allocated to hedge funds.

The merger followed a trend within Saudi Arabia and elsewhere in the Gulf where assets and funds are being consolidated to boost performance, reduce costs and increase efficiency through integration. The merger addresses the Kingdom’s debt issues and increasing scale potentially helps towards bonds issuance – a similar impetus to the mergers that created Oman’s OIA and Abu Dhabi’s MIC. The new entity will be a major player in the GCC’s bond markets, which have seen a surge in government and private issuance.

Source: SWF