Alwaleed’s investment kingdom reels without its prince

The Value of billionaire Saudi’s company has slumped since his detention in graft purge Read next Saudi authorities offer freedom deals to graft suspects Prince Alwaleed is engulfed in crisis following his detention as part of Riyadh’s anti-corruption crackdown

December 13, 2017

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 almost a fifth of its value since Prince Alwaleed’s detention, falling to $8.5bn, and causing the tycoon’s net wealth to drop 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 a 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 Banque Saudi Fransi 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. In his office, which is adorned with the magazine covers carrying the prince’s pictures and photos of his meetings with world leaders, unveiled female staff work in western-style clothing. The billionaire investor has long been an outspoken advocate for change and has championed women’s rights in the conservative kingdom, hiring a female pilot for his private jet.

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.


1 reply

  1. May be other countries could learn something: The poor country of Ukraine for instance has some billionaires around; who knows how they obtained their wealth. Ukraine – just as an example – could get rid of its debts. Many African countries are in similar position. Some individuals have wealth equal to the national debt…

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