Alwaleed’s investment kingdom reels without its prince
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When Citigroup was battling to survive the financial crisis, Prince Alwaleed bin Talal was quick to come to the aid of the US bank. As its shares tumbled, the Saudi billionaire publicly backed Vikram Pandit, Citi’s then-chief executive, and raised his stake in the group from 4 per cent to about 5 per cent. His intervention helped cement his reputation as the “Warren Buffett of Arabia”.
Now it is Prince Alwaleed who is engulfed in a crisis following his detention last month as part of Riyadh’s anti-corruption crackdown. But, in his hour of need, nobody has publicly come to his aid as billions of dollars have been wiped off his fortune and the investment firm he founded, Kingdom Holding Company, has been plunged into uncertainty.
KHC has lost nearly a fifth of its value since Prince Alwaleed’s detention, falling to $8.5bn and hitting the tycoon’s net wealth by $2bn to about $16bn, according to Forbes magazine.
Talal Al Maiman, KCH’s chief executive, has said the company, which is 95 per cent owned by the prince, has more than $12.5bn under management globally and “enjoys a solid financial position underpinned by a prudent and conservative funding plan”.
But bankers who speak to KHC’s staff say the office, perched at the top of an eponymous tower in Riyadh, is a black hole of information. Even those who have worked with the billionaire or his investment team for years know little of his fate or what the impact on his company might be.
KHC is Prince Alwaleed’s main investment vehicle and, in his absence, meaningful activity at the holding firm has been suspended, bankers say.
The company says the prince was moving towards a less hands-on role well before his detention. Mr Maiman said he wanted “to emphasise that KHC’s experienced and seasoned team of senior executives . . . are focused on their unwavering responsibilities to KHC’s shareholders”.
But local and international lenders are so alarmed by the confusion surrounding the prince’s arrest that they have put on hold $1bn in loans to finance KHC’s acquisition of a 16 per cent stake in Saudi Fransi Bank from Crédit Agricole.
“One must assume that he will be dealmaking for his future,” said one Saudi banker. “But in a broader sense, he is done now.”
Prince Alwaleed is among the most prominent of the 159 royals and businessmen detained in Riyadh’s Ritz-Carlton hotel as part of Crown Prince Mohammed bin Salman’s crackdown. Most have agreed to settlements under which they will hand over some of their assets to Saudi authorities in return for freedom.
As the government targets securing at least $100bn in the purge — the equivalent of the national debt — investigators have been raiding suspects’ bank accounts.
People briefed on the investigations have for weeks heard that Prince Alwaleed intended to fight the allegations in court rather than agree to a settlement. He even hired lawyers, according to two people.
But a banker close to Prince Alwaleed, 62, said he might still strike a deal with the authorities to secure his freedom. If he does, it is highly likely he would have to relinquish funds and assets.
One executive close to the prince has extended his time abroad because he fears that he could be caught up in the crackdown. Another is planning to move assets outside the Gulf to protect them against any attempt by the Saudi authorities to broaden the purge to members of the prince’s inner circle, another person said.
Prince Alwaleed set up KHC in 1980 and its holdings range from stakes in Twitter and Four Seasons Hotels and Resorts, to Euro Disney and Flynas, a budget Saudi Airline.
His wealth includes vast tracts of land stretching from Riyadh towards the Eastern Province, where he has planning permission for developments, according to one banker. Real estate, along with domestic businesses such as his media conglomerate, Rotana, could, along with cash, form the basis of a settlement, the banker added.
Some bankers say Prince Alwaleed has loaded his assets with debt. Others say he has been deleveraging in recent years, citing the sale of his holdings in Rupert Murdoch’s 21st Century Fox and plans to sell Lebanese hotels he owns.
The prince first invested in Citi in 1991 and it remains a core part of KHC’s portfolio, although his stake in the bank is now believed to be less than 3 per cent.
The US bank has been planning its return to Saudi Arabia since quitting a joint venture there in the aftermath of the September 11 attacks in New York. Citi obtained a licence in April but people close to the bank say Prince Alwaleed was not central to its expansion plans in the kingdom.
Like other associates, Citi executives have said little about the predicament of one of the bank’s biggest and best known shareholders.
Michael Corbat, Citi’s chief executive, last month described Prince Alwaleed as a “loyal supporter of the company”.
“We’ve got a number of people being held under this broad title of corruption and we actually don’t know what the specified charges or accusations are below that,” he said in an interview with Bloomberg TV.