**A rarity amongst the Saudi princes. If only more of his family had followed his example. However, he has done little investment within his own country or developed employment opportunities for ordinary Saudis. **
Royal player who is well past Go](http://thebusinessonline.com/modules/news/view.php?id=32515)
HOTEL George V: “Got it!”; Euro Disney: “Got it!”; Four Seasons Hotels: “Got them!” Monte Carlo Grand: “Got it!”; Fairmont Hotels: “Got them!” New York Plaza: “Got it!” Billionaire Prince Alwaleed of Saudi Arabia ticks off his hotel investments like a Monopoly player.
Last week he added the Savoy to his property hoard after paying about £220m (E315m, $411m) for the London landmark. He has also coughed up another $33m to help save Euro Disney, the troubled theme park company.
But it’s all petty cash to a businessman said to be the world’s second-wealthiest person, after Microsoft’s Bill Gates. Prince Alwaleed bin Talal bin Abdulaziz Al Saud is the acceptable face of Saudi Arabia. While many Saudi princes have spent their wealth on superyachts and supermodels - and squandered the rest - the 48-year-old Alwaleed is an exception.
He was chairman of his own company by the time he was 14 and a self-made billionaire by 31. And his is not inherited wealth. He says he started out in 1979 with a loan of $30,000 from his father. He also mortgaged, for about $400,000, a house gifted to him by his father, Prince Talal Bin Abdulaziz, brother of King Fahd. Each month, as a grandson of Ibn Saud, the warrior founder of the kingdom, he receives $15,000 - a sum that would hardly meet most Saudi princes’s gambling debts or tailors’ bills.
His investments and businesses have amassed a fortune that he estimates at about $14.3bn. In 1991, and barely known on the international business stage, he risked $797m in buying a stake (currently 5%, making him the largest single shareholder) in the then near bankrupt American bank Citicorp (later renamed Citigroup).
He is devout, hard working and intelligent, and unlike many Saudi royals with several wives, Alwaleed has married only once and has two children. The prince began building his investment portfolio in 1979, when he returned to Saudi Arabia after earning his bachelor’s degree in the United States. At first, he established a number of local ventures, focusing on construction and property.
He is admired as an internationally minded, long-term international investor with a record for identifying undervalued companies. One banker who deals with him says: “He is by far the the most liquid player in the world.” Another describes him as a “bottom feeder” and “bargain hunter”. Often attired as a City slicker in smart western suits and ties, and at other times resplendent in the white robes and red-check headdress of a Bedouin, he says of his investment strategy: “I’ve just one rule of thumb. Anything that’s worth $4bn and costs $1bn, buy it.”
Time magazine called Alwaleed an “Arabian Warren Buffett”. Forbes described him as one of the world’s shrewdest investors. In 1995, Business Week said that by 2010 he could be “the most powerful and influential businessman on earth”. Yet for all this, his finances remain an enigma, suggesting to some that he invests more than he earns - so either his income is higher than declared or he has other income-producing assets which are unrevealed.
His investment record looks patchy: like many others he took a beating in the dotcom collapse and from the failed airline TWA. His investments, typically minority holdings, are eclectic - media (News Corp), banking (Citigroup, which has just reported a $17bn profit) retailing (Saks Fifth Avenue), entertainment (AOL, Time Warner and Euro Disney), telecoms (Teledesic, Motorola) and hotels. In Saudi Arabia Alwaleed owns stakes in three quoted businesses, a bank, a food conglomerate and a venture-capital outfit. He is involved in land deals and construction.
Kingdom Holdings, his private investment company where he is chairman, holds huge investments in many corporate giants - it has 5% of Apple, almost 4% of News Corp and just less than 1% of Time Warner and Motorola. He holds stakes in London’s Canary Wharf, Planet Hollywood, Four Seasons, Daewoo, Hyundai and Netscape. He rarely sells his investments, one exception being the New York Plaza on Fifth Avenue where he reduced his 50% holding.
Alwaleed doesn’t like debt, but occasionally uses his shares as collateral. Late last year, he raised $1.5bn for a joint venture with Bank of Scotland (HBoS) and Fairmont to buy luxury hotels in Europe. In December 1996 he bought the Hotel George V in Paris for £104m.
With his ability to write cheques for hundreds of millions of dollars, he can help companies he’s invested in, such as Euro Disney, through any cash crisis. The best example is Citicorp. In autumn 1990, the bank, then America’s largest, desperately needed capital. But Citicorp’s search for more than $1bn from investors had yielded little results. Amid fears the bank might fail, its shares plunged.
Enter Alwaleed, then barely known. At the end of 1990 he bought 4.9% of Citicorp’s existing common shares for $207m. In 1991, he spent another $590m buying new preferred shares. This took his stake to 14.9%. He later cut his stake below 10% after the US Federal Reserve failed to give him the all-clear on the size of his holding.
For a novice investor, he timed his purchases well. Two weeks after he bought the preferred shares, Citicorp’s capital crisis receded when international investors bought a further $600m of new preferred shares. By 1994 the bank’s share price had soared and the prince had made his reputation - as well as a paper fortune.
Unfortunately for him such good fortune is rare. Alwaleed’s other listed investments outside Saudi Arabia appear to have barely kept pace with their local stock markets. One in particular has dragged him down: his rescue in 1994 of Euro Disney. That looks like a grave error. Last week he looked as if he was compounding the error by buying another $33m of new shares in the French theme park operator. Even with his purchase of additional stock, Alwaleed’s overall stake in Euro Disney will be diluted from 16% to 10% because of the new shares being issued.
Investors responded favourably to the news. Euro Disney shares, which lost more than one-third of their value last year, rose 4 cents to 29 cents in Paris. For its part, Walt Disney Company will maintain its holding in Euro Disney by buying $132m worth of new shares.
The Savoy Hotel, along with its adjoining restaurant, Simpsons in the Strand, also present the prince with a challenge. The hotel has been bought and resold more times than a Derby winner, with the loss of its reputation for excellence. With Bank of Scotland Corporate, part of HBOS banking group, and Fairmont, the prince is buying the Savoy from a consortium of Irish investors led by Quinlan Private, which acquired the entire Savoy Group for £750m only last May. Management of the 263-room Savoy will pass to Fairmont Hotels & Resorts, a Canadian chain in which Alwaleed has a 5% stake.
The prince is also among the shortlisted bidders for the InterContinental Paris hotel, up for sale with an estimated £200m price tag. But success is by no means certain. In the next round of bidding his joint venture is expected to face competition from, among others, Blackstone Group, a former owner of the Savoy Group, and the investment arm of the Singapore government.
While Alwaleed prides himself on knowing when to buy, he has yet to demonstrate that he knows when to sell. Some of his investments have lost him millions on paper. He remains relaxed about this: “My investments are for the very long term,” he says.
He is outspoken. After 11 September he told Americans: “We must address some of the issues that led to such a criminal attack.” That didn’t go down well. On hearing it, New York’s then mayor, Rudolph Giuliani, rejected a $10m donation from the prince for the Twin Tower fund, calling his statement “highly irresponsible and very, very dangerous”. The prince said he was only suggesting America should re-examine policies that had led to the attack.
In October 2001, with his luxury yacht riding at anchor off Beirut, he made some unprincely comments about Lebanon’s £20bn national debt. In a speech he asked: “Can any one of you brothers and sisters present in this gathering tell me what the expected debt figure will be in the next four or five years?” Will its size continue to be 170% of gross domestic product at the end of that period?" It was a sideswipe at the prime minister Rafiq Hariri, who holds joint Saudi and Lebanese nationality. He holds the leading shareholding in Solidaire, the company rebuilding the centre of Beirut. Many blame Hariri for the country’s huge debts.
Alwaleed’s real value to Saudi Arabia is that the ruling royal family is secretive and inward-looking, clinging to power by a thread of increasing fragility. The prince is the opposite. Open, forward-looking and someone who embraces globalisation.