Saudi billionaire set to cash in on Kingdom’s wealth

Kingdom, which owns stakes in Citigroup as well as Rupert Murdoch’s News Corporation and Twitter, has about US$4 billion worth “liquid” investments that are marked to market.

Prince Al Waleed bin Talal, the Saudi billionaire, is banking on reaping the fruits of private investments made by Kingdom Holdings, the investment firm he controls, as they gradually make their way to public markets.

Kingdom, which owns stakes in Citigroup as well as Rupert Murdoch’s News Corporation and Twitter, has about US$4 billion worth of “liquid” investments that are marked to market. They make up about 30 per cent of the company’s portfolio.

That leaves the remaining 70 per cent portion, which is privately held – “what the prince likes to call his jewels” – says Mohammed Fahmy, who was appointed as Kingdom’s chief financial officer this month after the long-time serving Shadi Sanbar stepped down from the role last November.

The prince’s “vision is to see monetisation of our private investments in the next two to three years, such as a reverse merger or potential listing of assets, as they become listed to market”, Mr Fahmy said.

Having tripled the value of its investment in Twitter last year, Kingdom spent $125 million on 360buy Jingdong, the Chinese answer to Amazon, financial statements showed.

The Chinese online retailer is preparing to sell $2bn worth of shares to investors in the second half of this year.

Kingdom also has a big lodging portfolio, which includes big names such as Mövenpick, Fairmont and the Four Seasons.

The world’s biggest hotel operator Hilton Worldwide Holdings, which secured $2.23bn from investors in an initial public offering last month, has confirmed investment appetite for the industry and encouraged more hotel and leisure chains to pursue capital markets.

“Our objective right now is to grow [Four Seasons and Fairmont] and have a monetisation process,” Prince Al Waleed told Bloomberg in November. “The hotel industry is facing major upside right now. This may go on another three or four years. So there is a zone of opportunity for us right now.”

Kingdom acquired a 95 per cent stake in the Four Seasons in 2007, in a deal valued at $3.8bn. The company also led a consortium of investors to buy the Fairmont in 2006 at a value of $3.24bn.

The Four Seasons chief executive Allen Smith has been assigned to make preparations for a public share sale after pressure mounted from Kingdom, which owns 47 per cent of Fairmont.

“Part of his mandate is to take the company public over the next two to three years,” Mr Fahmy said.

Prince Al Waleed’s approach to these investments offer a very telling picture about how he sees the global economy taking shape, the health of the capital markets and United States equities in general.

“With international markets continuing a wave of recovery and US stock markets remaining positive, we are expecting a strong year in 2014,” Mr Fahmy said. “We are in a growth stage and looking for new investments of firms that in their growth stage, stable and generate excess clash flows that get distributed to shareholders.”

On Tuesday, the company said its profits for the fourth quarter had surged more than 10 per cent to 231.2 million riyals (Dh226.4m), compared with 209.8m riyals a year earlier.

A number of high-profile fund managers in the region do not invest in Kingdom Holding because of the limited size of its floated shares on the Saudi stock exchange. The company listed 5 per cent of its shares on the exchange after an initial public offering in 2007.