Alwaleed closes in on US$7bn flotation

Prince Alwaleed bin Talal is reportedly a couple of months away from a US$7bn flotation of his main investment vehicle, Kingdom Holding Company (KHC). According to UK press reports, Alwaleed, a member of the Saudi royal family and one of the world’s richest individuals, is to float a 30% stake in Kingdom on the Saudi Arabian stock market, which would be a massive boost to the battered bourse.

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By  Boyd Farrow Published  August 27, 2006

Prince Alwaleed bin Talal is reportedly a couple of months away from a US$7bn flotation of his main investment vehicle, Kingdom Holding Company (KHC). According to UK press reports, Alwaleed, a member of the Saudi royal family and one of the world’s richest individuals, is to float a 30% stake in Kingdom on the Saudi Arabian stock market, which would be a massive boost to the battered bourse. Britain’s Sunday Times says Alwaleed is working with Citigroup, the US investment bank in which he owns around 4%, and Samba, Saudi Arabia’s second largest listed bank, of which he owns 7%. The two concerns will be the lead advisers to the listing, which is expected to happen within two to three months. This would be the second vehicle to go public this year for the prince, who is estimated to be worth about US$20bn, following the dual listing of his hospitality company Kingdom Hotels Corporation in Dubai and London. Kingdom Hotels has a US$2bn-plus portfolio and owns properties managed by companies including Four Seasons, Movenpick and Fairmont. KHC has stakes in a huge number of leading international companies, including Motorola, Apple, Kodak and Disneyland Resort and Theme Park, Paris, in which he owns 17.3%. KHC also owns around 5% of Rupert Murdoch’s News Corp, owner of The Sunday Times. Alwaleed has long been regarded as one of the world’s savviest investors, and has often been referred to as ‘the Saudi Warren Buffett’, principally for turning an US$800m investment in Citigroup into a US$10bn holding. The prince, who, legend has it, follows the markets by satellite from his yacht, scored his first big win in 1991: US$790m of depressed Citicorp stock that has grown to an US$8 billion stake in what is now Citigroup. Kingdom’s holding in Citigroup had no bearing on its appointment to the float, according to sources mentioned in the Times report, which points out that Deutsche Bank and Morgan Stanley had organised the share offering of Kingdom Hotels. The flotation of KHK in Saudi Arabia is likely to raise the profile and prestige of the country’s stock market, the Tadawul, and could lead to greater international institutional interest. According to the Tadawal All-Share Index, the Saudi market’s capitalisation more than doubled in 2005 - but in the first two weeks of March, the Tadawul lost 30% of its value, and halved in value between February and May. Indeed the market crash in mid-May finally cost regulator Jammaz al-Suhaimi — the respected regulator who had been instrumental in establishing the Capital Markets Authority — his job. Tadawal is now planning an IPO later this year, in a bid to restore investor confidence and boost demand for shares. Abdullah al-Suweilmy, the exchange’s general manager, has said that there is no decision yet on how large the flotation will be but has hinted that the government will exceed its usual 30% divestment and could, potentially, sell a majority stake to investors. The Saudi government is to transfer Tadawal’s management to a new holding company to pave the way for the IPO. The bourse’s name will be changed to the internationally friendly Saudi Arabian Financial Exchange (Safe), and will be relocated to a new financial centre in the north of Riyadh – part of the authorities’ plans to remake the Saudi financial sector. The new King Abdullah Financial District (KAFD) “will be the Middle East’s first financial district on a scale, and of regulatory and technological standards, to match the major global financial centres”, a launch press statement said. If a portion of KHC were to be floated on the Tadawul, it would be a significant blow to the Dubai International Financial Exchange (DIFX). The DIFX had previously been tipped to list Prince Alwaleed's group.

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