State General Reserve Fund (SGRF)
What Was the State General Reserve Fund (SGRF)?
The term State General Reserve Fund (SGRF) alluded to a sovereign wealth fund (SWF)established by the Sultanate of Oman in 1980. The fund was made to deal with the investments of Oman's revenues, with the objective of guaranteeing the country's economic stability and sustainable development, and was administered by Oman's Ministry of Finance. The Arab country's principal export and, subsequently, primary revenue driver is oil. The SGRF was combined with the Oman Investment Fund (OIF) in 2020 to make the Oman Investment Authority (OIA) by royal decree.
Understanding the State General Reserve Fund (SGRF)
Oman's Ministry of National Economy considered the foundation of the SGRF as the most conspicuous accomplishment of the country's initial five-year development plan. This plan covered the period from 1976 to 1980. This time span corresponded with a boom on the planet's oil prices. At that point, oil supplies dropped, prompting panic, demand to rocket, and prices to emphatically rise.
The sovereign wealth fund invested the financial surplus sent to it and planned to do the following:
- Boost investment revenues and control them such that limited risk
- Make investments and earn revenue by distributing its risk standards
- Strategically direct investment for the long-term
- Draw in international investments
- Advance and foster nearby investments
- Advance economic development in Oman
The fund's investment portfolio was diversified across 25 countries, with a large number of sectors notwithstanding strategic investments to guarantee sustainable long-term returns. Its investments remembered tradable assets for the public market, like global equity, fixed income bonds, and short-term assets.
The SGRF additionally invested in private, non-tradable assets, like private real estate investments, logistics, commercial and industrial undertakings as well as different services. For example, the fund acquired a 30% stake in Corporate Commercial Bank — Corpbank for short — Bulgaria's 10th biggest bank in terms of assets. The acquisition was completed in January 2009 for an undisclosed sum.
Special Considerations
The SGRF was authoritatively dissolved after it was merged with the OIF and the Directorate General of Investments at the Ministry of Finance by royal decree in June 2020 to form another legal entity called the Oman Investment Authority (OIA). The move consolidated the country's sovereign wealth funds under a single organization when Oman was under extraordinary fiscal pressure from low oil prices.
The fund's assets were estimated at more than $14.3 billion at the hour of the merger, while the OIF was valued at $3.4 billion, as indicated by a report from Pensions and Investments. The assets and employees of each were moved to the new organization.
The $18 billion Oman Investment Authority (OIA) was formed in 2020 by combining the SGRF and other legal elements — all of which had similar investment objectives.
The recently formed OIA's objectives continue as before as the SGRF. It puts resources into in excess of 35 unique international markets, designating anyplace between 65% to 85% in publicly-tradable assets, with the leftover portion being invested in private endeavors.
The primary area of investment for the OIA lies in Europe, followed by the Asian and African markets. Limited investments are held in South and North America as well as Australia.
Features
- It was laid out in 1980 to oversee profits from the state's oil revenues, differentiate Oman's income sources, and advance nearby economic development.
- The SGRF was broken down and merged with Oman's other sovereign wealth management funds to form the new Oman Investment Authority.
- The State General Reserve Fund was a sovereign wealth fund of the Sultanate of Oman.
- The objectives of the recently formed OIA continue as before as those of the SGRF.
