“If I am going to do something, I do it spectacularly or I do not do it at all.” — Prince al-Waleed bin Talal bin Ab Al-Saud

Prince al-Waleed bin Talal bin Ab Al-Saud: Background & bioPrince Alwaleed

Prince al-Waleed bin Talal bin Ab Al-Saud parlayed a 1979 inheritance of $15000 and a house that he mortgaged for $400,000 into a $23 billion empire. Prince Alwaleed, the world’s second richest investor (behind Warren Buffett), sleeps only five hours a day. This leaves him a lot of time to monitor his portfolio on Bloomberg, and conduct dozens of meetings and phone calls.

HRH Prince Alwaleed Bin Talal Bin AbdulAziz Alsaud was born in Riyadh, Saudi Arabia, in March 1955 to Prince Talal Bin AbdulAziz Alsaud, son of the founder of Saudi Arabia, King AbdulAziz Alsaud, and to Princess Mona El-Solh, daughter of Riad El-Solh, the first Prime Minister of modern day Lebanon and a leader of Lebanese independence.

The Prince was educated in the U.S. where he got his B. Sc. in Business Administration, magna cum laude, Menlo College, California, in 1979, and his M.A. in Social Science with honours, Syracuse University, in 1985. HRH Prince Alwaleed Bin Talal Bin AbdulAziz Alsaud, member of the Saudi Royal family, is a private entrepreneur and an international investor.

The Prince began building his investment portfolio in 1979, when he returned to Saudi Arabia after earning his Bachelor’s degree in the U.S.

Prince Alwaleed established a number of business ventures, initially focusing on construction and real estate. Over time, the Prince’s investments rapidly grew and eventually led to the formation of Kingdom Holding Company, which invested alongside other entities controlled by HRH, in banking, telecommunications, broadcasting & media, entertainment, hospitality, computers and electronics, agriculture, restaurants, upscale fashion, retailing, supermarkets, tourism, travel, and automotive manufacturing.

He is founder, CEO and 95%-owner of Kingdom Holding Company. He has been nicknamed by Time magazine as the “Arabian Warren Buffett”. Billionaire Prince Alwaleed bin Talal has long stood out from other Saudi princes, both in his social views and his investment philosophy.

In the conservative kingdom, where showing a woman’s face in a newspaper still causes a stir, he ignores such restrictions, receiving dignitaries accompanied by his unveiled wife, Princess Ameera, and instructs papers to publish their pictures. In his office, in the sleek glass and steel 311-m Kingdom Tower, he flaunts the fact that women work alongside men without wearing the obligatory black cloak or abaya.

While Saudi clerics issue veiled threats against owners of satellite televisions and cinemas are outlawed, the prince, a nephew of Saudi Arabia’s King Abdullah, built Rotana entertainment group, which on Tuesday agreed to welcome Rupert Murdoch’s News Corp as a shareholder. Rotana operates seven television channels and runs the Arab world’s largest record label, showcasing Arab pop stars in video clips that are often a bit too racy for the conservative public.

Moreover, while Saudi banks promote their Islamic-compliant offerings and downplay “traditional” banking, the prince made much of his fortune betting on ailing Citibank in 1991. Today, with nearly 5% of Citigroup, he is the largest individual investor. The portfolio of his 95-percent owned investment company, Kingdom Holding, also now includes Apple, News Corp, and stakes in a string of luxury hotels throughout the world, including the flagship Four Seasons as well as the George V Hotel in Paris and the Fairmont Raffles.

Such global exposure resulted in losses of SR30.98bn in the fourth quarter of 2008, causing his ranking in Forbes’ list of billionaires to slip from 19 to 22. Nevertheless, he remains the wealthiest Arab businessperson with a net worth of $16.3bn, of which Kingdom Holding, a publicly listed company in Saudi Arabia, accounts for almost half.

2009 was a difficult year in which he was forced to sell assets at a discount, and his company suffered losses of 65% of its capital and put the firm on the brink of delisting. To resolve this problem Prince Alwaleed last month shifted some of his Citi stake, with an estimated value of $600m, into Kingdom Holding. The ‘donation,’’ as he called it, helped shore up Kingdom’s shares, which have soared 75% on heavy volume since the injection, a reverse split and reduction of capital. Kingdom reported a net profit of SR156m ($41.6m) in the fourth quarter ended December. It is difficult to inject cash with the tight credit situation, so he moved his own

shares that were not doing well from his right pocket to his left pocket, gaining over 50% in the Saudi index in just a few days,’’ says Hisham Abu Jamee, chief investment officer at Bakheet Investment Group.

Alwaleed said the transfer enabled him to wipe $7.8 billion in accumulated losses from the balance sheet, indicating that it would permit new borrowing for real estate and other projects. He also reaffirmed plans for a $26bn residential and commercial project in Jeddah, which will include a more than 1000m tall tower, taller than Dubai’s 828-m Burj Khalifa.

Bankers have quietly expressed their reservations, and it remains to be seen whether financing will be available, given Dubai’s continuing real estate and debt crisis. Yet the grandson of Saudi Arabia’s founder says he is no ordinary borrower. His financial, political, and personal stature in the Middle East enables him to meet with heads of state and court and be courted by a unique pool of prospective investors.

However, analysts estimate that Kingdom Holding faces a further $4bn in unrealized losses, which may worsen as Citi, which now represents more than 60% of its holdings, fails to rebound in 2010.

“In the short term the company looks ok, but with Citi announcing losses, shares may not recover soon and it may drag Kingdom’s value down along with it,” says Mr Abu Jamee.

In recognition of his business and civic accomplishments, Prince Alwaleed has been the recipient of numerous honors and accolades from many organizations, societies, monarchs and heads of state. These include 14 Honorary Doctorates from universities in the U.S., Britain, Korea, Egypt, Malaysia, Ghana, Palestine, Philippines, Tunisia and Uganda, to name only a few. The citations accompanying these honors particularly point to his financial contributions to education, international understanding, coexistence, and to the provision of assistance to the victims of natural disasters, as well as to the poor and needy, irrespective of nationality, race or creed. They refer to his fidelity to the dictum “To whom much is given, from whom much is expected.”

Prince al-Waleed bin Talal bin Ab Al-Saud: Business

Al-Waleed began his business career in 1979 upon graduation from Menlo College California. The Prince’s activities as an investor came to prominence when he bought a substantial tranche of shares in Citicorp in the 1990s when that firm was in difficulties. With an initial investment of $550 million ($2.98 a share after adjusting for stock splits, acquisitions and spin-offs, according to Bloomberg calculations) to bail out Citibank caused by underperforming American real estate loans and Latin American businesses, his holdings in Citigroup now comprise for about $1 billion. His investments in Citibank earned him the title of “Arabian Warren Buffett”.

His stake in Citibank once accounted for approximately half of his wealth, prior to the recent financial crisis. At the end of 1990, he bought 4.9% of Citicorp’s existing common shares for $207 million ($12.46 per share), the most that he could without being legally obliged to declare his interest. The “Arabian Warren Buffett” in 1991, spent $590m buying new preferred shares, convertible into common shares at $16 each. This amounted to a further 10% of Citicorp and took his stake to 14.9%. Later, he also made large investments in AOL, Apple Inc., MCI Inc., Motorola, Fox News and other technology and media companies.

His real estate holdings have included large stakes in the Four Seasons hotel chain and the Plaza Hotel in New York. He sold half of his shares in the latter in August 2004. He has made investments in London’s Savoy Hotel and Monaco’s Monte Carlo Grand Hotel. He currently

holds a 10% stake in Euro Disney SCA, the company that owns, manages and maintains Disneyland Paris in Marne-la-Vallee, France.

In January 2005, Al-Waleed purchased the Savoy Hotel in London for an estimated £250 million, to be managed by Fairmont Hotels; his sister, The Princess Sultana Nurul Al-Waleed owns an estimated 16% stake. In January 2006, in partnership with the U.S. real estate firm Colony Capital, Kingdom Holding acquired Toronto, CA-based Fairmont Hotels for an estimated $3.9 billion.

In August 2011, Al-Waleed announced that his company had contracted Saudi Binladen Group to build the next tallest building in the World, the Kingdom Tower at a height of at least 1,000 meters (3,300 ft) for SR 4.6 billion. The original plan announced in 2008 called it Arabic for “the Tower of One Mile” at 1,609 meters (5,279 ft) and an estimated cost of $10 billion. In 1997, Time Magazine reported that bin Talal owned about 5% of News Corporation. By 2010, Alwaleed’s stake in News Corp. was a stake of about 7% worth $3Bn; and News Corp. had a $70 million (9%) investment in Al-Waleed’s Rotana Group, the Arab World’s largest entertainment company. This review of his holdings also referred to the Al-Waleed investment AOL as if it was perhaps in the past. In June 2011 bin Tahal was linked with a takeover of Premier League football club Everton for a reported £100 million.

In December 2011, bin Talal invested $300 Million in Twitter through the purchase of secondary shares from insiders. The purchase gives Kingdom Holding a “more than 3% share” of the company, which was valued at $8Bn in late summer 2011.

Looking to other opportunities, the banking sector caught the Prince’s eye. In 1988, he acquired a controlling stake in the then ailing United Saudi Commercial Bank (USCB), and within a year he turned it into Saudi Arabia’s most profitable commercial bank. The value of the bank’s stock subsequently multiplied twenty-fold.

From there he went on to bring about a merger with the struggling Saudi Cairo Bank, thus creating the United Saudi Bank (USB). After that, Prince Alwaleed cast his eye on the more dominant Saudi American Bank (SAMBA) and came to the conclusion that a merger of USB with it would be wise, given SAMBA’s very competent managerial team. In 1999, that merger became complete. Perhaps no single transaction has catapulted Prince Alwaleed to the world’s financial stage in as spectacular a fashion as did his acquisition in 1991 of Citibank (subsequently, Citigroup) stocks.

Few people could then imagine that a Saudi Arabian, and a royal at that, would burst onto the international scene, seemingly out of nowhere, to invest so heavily in one of the major banks of the world and to help restore it to such health that it would become the leading financial institution in the world. Needless to say, this was not propelled by a sense of altruism, but by the impetus to act whenever suitable opportunities presented themselves. That investment has since brought Prince Alwaleed stellar returns, and as Citigroup’s largest individual shareholder, that segment of his total portfolio now constitutes the biggest portion of his wealth.

Significant though it is, the banking sector has not been the only focus of Prince Alwaleeds’s investment search. He has constantly scanned the spectrum for opportunities in other spheres. Over the years he has acquired substantial interests in a variety of sectors, such as hotels, real estate, media, broadcasting, entertainment, information technology, communications, upscale fashion retailing, supermarkets, health and education. Within this diversified portfolio there are investments in local companies including Savola, Tasnee, Saudi Research and Marketing Group (SRMG) and National Air Services Company Limited (NAS), and two significant real estate developments, one in Jeddah and the other in Riyadh.

The portfolio also includes investments in the recognized international names of Four Seasons Hotels and Resorts, George V Hotel in Paris, Fairmont Raffles International Inc., Mövenpick Hotels & Resorts, Songbird Estates (Canary Wharf), Apple Inc., Time Warner, News Corp., Walt Disney, Euro Disney, PepsiCo, Procter & Gamble, Motorola, Hewlett Packard and Eastman Kodak, among others.

Prince al-Waleed bin Talal bin Ab Al-Saud: Investment philosophy

Time magazine first highlighted Prince Alwaleed’s buy-and-hold investment strategy and saddled him with the title of the “Arabian Warren Buffett”. Yet there are striking differences between the pair, extending beyond Alwaleed’s glamorous lifestyle. “While the prince has displayed remarkable acumen in deciding when to buy stocks… he has demonstrated little knack for knowing when to sell,” says The Middle East Intelligence Bulletin. “In fact, he has rarely parted with any major investments.” Alwaleed makes no bones about attributing his reluctance to

drop unprofitable investments to sentimentalism: “I fall in love, basically, with my companies.” But the upshot is that his overall returns have often been dire. “If the prince were an American mutual fund”, concluded The Economist in 1999, “his performance would rank in the bottom half of the industry”.

Alwaleed says that the big wins – such as his 1997 bet on the resurgence of Apple – far outweigh the non-performers. But given the importance of Citi to his portfolio, the events of the past few weeks must trouble him. And cracks may already be beginning to show. Alwaleed has been betting big on hotels, snapping up trophies, such as the London Savoy, and teaming up with Bill Gates earlier this year to take over Four Seasons Inc. “My Four Seasons shares will never be sold,” he declared. Yet this week, reports the Evening Standard, Kingdom Holdings quietly sold off the chain’s flagship Mayfair hotel for £70.5m. “When there’s a panic, I’m always happy”, remarked the bargain-hunting prince in 2005. His sunny outlook may be sorely tested this time around.

Prince al-Waleed bin Talal bin Ab Al-Saud: Quotes

“When there’s a panic, I’m always happy”

“I am not panicking, and I am not scared, I have been through the Gulf War, the Asia crisis, and the Russian crisis.”

“My wheels are running. My investments are local, regional and international.”

“Nowadays, anyone who cannot speak English and is incapable of using the Internet is regarded as backward.”

“We are getting hurt, but I am a long-term investor.”

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