Prince Alwaleed sells 16.87% stake in Kingdom Holding to PIF in $1.5bn deal

Kingdom Holding is selling 625 million shares at a price of 9.09 Saudi riyals each

Prince Alwaleed will own 78.13 per cent of Kingdom Holding following the deal. AFP

Kingdom Holding, the Saudi Arabian investment company controlled by Prince Alwaleed bin Talal, sold a 16.87 per cent stake in the company to the Public Investment Fund, the country’s sovereign wealth fund, in a deal valued at $1.5 billion.

The company is selling 625 million shares to the PIF at a price of 9.09 Saudi riyals ($2.42) each, the company said in a statement to the Tadawul Stock Exchange, where its shares are traded. The company's share price is about 9 per cent lower since the start of the year.

Following the completion of the deal, Prince Alwaleed will own a 78.13 per cent stake in Kingdom Holding, the company said.

The market value of Kingdom Holding as of Sunday is about 33.69bn riyals.

Kingdom Holding’s business interests span sectors from aviation, banking and financial institutions to e-commerce, education, hotel management, health care, hospitality, real estate, petrochemicals and private equity.

The Riyadh company holds stakes in international companies including CitiGroup, JD.com, global hospitality company Accor and ride-sharing companies Uber, Careem and Lyft.

In its home market, the company controls Kingdom Hospitals and Kingdom Schools, Saudi petrochemicals company Tasnee, budget airline flynas, private aviation company NasJet and digital services company Deezer, among others.

Kingdom Holding reported a huge jump in its first-quarter profit, driven by gains on the sale of half of the company’s stake in an associate, as well as improved hotel revenue and other operating revenue.

The company's net profit after zakat and tax rose to 5.9bn riyals, compared with 91 million riyals reported during the same period last year, according to the company's financial statement. Revenue during the period more than doubled to 450m riyals.

Kingdom Holding has completed several investments in recent months.

Earlier this year, it completed a 8.29bn riyals deal to sell half of its stake in global hospitality company Four Seasons. The company retained a 23.75 per cent stake in the hotels and resorts operator after the deal.

Prince Alwaleed also retained his $1.9bn stake in Twitter following a proposal from billionaire businessman Elon Musk to acquire the microblogging platform for $44bn last month.

The Saudi billionaire, who initially criticised Mr Musk's offer, hailed the Tesla founder as “an excellent leader” following his decision to retain the stake.

“I believe you will be an excellent leader for Twitter to propel and maximise its great potential. Kingdom Holding and I look forward to roll our $1.9bn in the 'new' Twitter and join you on this exciting journey,” he tweeted this month.

The PIF, which plays an integral role in the kingdom's Vision 2030 plan, has also been expanding its portfolio.

Earlier this month, it bought a 5.01 per cent stake in Japan's Nintendo, boosting its portfolio in the lucrative global gaming sector.

The fund also launched a coffee company to develop the national industry, boost production capacity and promote Saudi coffee beans as a global product, in line with the kingdom's focus on the priority sector of food and agriculture.

In August, the PIF bought a stake in Italian luxury car maker Pagani, which makes some of the world’s most expensive supercars and counts Meta founder Mark Zuckerberg and footballer Lionel Messi on its list of high-profile clients.

The PIF seeks to diversify the Arab world's largest economy and reduce its reliance on oil. Under a five-year strategy that was announced in January last year, the fund aims to more than double the value of its assets under management to $1.07 trillion and commit $40bn a year to develop the domestic economy, until 2025.