Arab News, Tuesday, Dec 29, 2020 | Jamadi Al Awwal 14, 1442
Public Pension Agency investment in SMEs achieved 46% returns: Governor
Saudi Arabia: The coronavirus pandemic created attractive
investment opportunities as prices reached low levels, CNBC Arabia reported,
citing Mohammed Talal Alnahas, Governor of the Public Pension Agency (PPA).
He added that the agency created, last April, a portfolio to invest in the
shares of small and medium enterprises (SMEs), which achieved returns of more
than 46 percent.
During the coronavirus pandemic, the agency invested in the technical sector,
realizing gains of about 19 percent, the Governor said.
The agency’s investments were temporarily affected by the pandemic, but began to
recover gradually after the markets rebounded, Alnahas added, indicating that
the presence of assets diversification in the investment portfolio had a major
role in the durability and strength of the agency’s investment portfolio.
He pointed out that the portfolio is subject to analytical scenarios and tests
to absorb the most prominent shocks that might occur, and it has the ability to
predict well.
Alnahas added that after restructuring Raidah Investment Co. (RIC), which is
fully owned by the agency, the investment was also well restructured, indicating
that the agency achieved cumulative returns of 27 percent over the past three
years, with an annual return rate of 7.6 percent.
The PPA’s investments are distributed in most countries, both in developed and
emerging markets, the governor said, adding that the agency is also a strong
investor in the Saudi market, which constitutes more than 50 percent of its
portfolio.
The Saudi market today has become attractive to investments, and PPA invests in
the stock market and it is considered one of the largest investors through
investing in 67 listed companies and three funds.
The PPA invests in over 19 non-listed companies and in National Debt Management
Center issues of Sukuk and bonds in addition to the real estate sector.
He also pointed out that the agency has huge investments in the real estate
sector that exceeded SR17 billion ($4.53 billion), and it has mega projects in
Riyadh and Jeddah, where occupancy rate is 100 percent.
The PPA also invests in privatization programs as they are considered attractive
due to the diversity of its sectors, the Governor said, while noting that the
agency also looks at the investment performance in general, and if it is not
good and does not give the expected returns, then it gradually exits.
He also emphasized that the investment portfolio is subject to strategic
distribution, preceded by an actuarial study, which is used in addition to the
recommendations of the board of directors, to begin the process of strategic
distribution and to fulfill obligations, whether short, medium or long-term.
Elsewhere, Alnahas pointed out that the number of retirees reached 42,000 during
the current year, 35 percent of whom are early retirement, indicating that early
retirement is one of the most prominent challenges facing the agency, as there
must be a match between expenses and revenue.