Can Alwaleed bin Talal maintain his dominance in his investment kingdom in the future?

Is the prince, who was the international front for Saudi investment, unable to lead the scene alone? Over the years, Prince Alwaleed bin Talal has managed to raise hundreds of millions of dollars by investing in various companies, including Citigroup, Uber and Twitter, with almost complete independence.

However, informed sources said the Saudi public investment fund now owns a minority stake in the Kingdom holding company owned by Prince Alwaleed, and it is unlikely the sovereign fund will be content to stay on the sidelines.

Two sources familiar with the conditions of the Saudi business sector told Reuters that the sovereign wealth fund, which is at the heart of Crown Prince Mohammed bin Salman’s plan to diversify the Saudi economy, wants the Kingdom Holding Company’s investment committee to should have more influence in decision making. make as it was in the past.

An investor in a sovereign fund in the Gulf said: “The Public Investment Fund wants to be an active investor.”

When contacted by Reuters, the PIF, Kingdom Holdings, Prince Alwaleed and his spokesman declined to comment on what the fund’s holding of a minority stake in Kingdom Holding would mean for future investments.

Al-Waleed, 67, has for a long time maintained a tight grip on the shares of the Kingdom-owned company, as he owned all of his shares, except for a five per cent stake which he placed on the Saudi stock exchange until bought the Public Investment Fund. a 16.87 percent stake for $ 1.5 billion last month.

The deal came more than four years after al-Waleed’s name was included in a list targeted by an anti-corruption campaign ordered by the crown prince. Al-Waleed was detained for three months at the Ritz-Carlton Hotel, Riyadh, along with dozens of members of the ruling family, senior officials and businessmen.

Authorities released most of the detainees after reaching financial settlements, and Al-Waleed said in March 2018 that he had entered into a secret agreement with the government.

It was not clear whether the sovereign wealth fund’s deal to buy a stake in its company was linked to the settlement. A spokesman for Prince Al-Waleed, the grandson of King Abdulaziz Al Saud, the first king of Saudi Arabia and Riad Al Solh, the first prime minister of Lebanon, said the settlement was just a business deal.

The Sovereign Fund transaction was concluded during that year at the lowest price per share and without any price premium on the share. The bankers who usually handle the fund or Prince Alwaleed’s transactions, according to two informed sources, had no role in that transaction.

“Change in style”

The Saudi government acquired direct control interests over some of the companies of Saudi businessmen arrested in 2017, including the Bin Laden Contracting Group and MBC Media, as part of their release settlements.

But some analysts have said that the state’s intervention in Kingdom Holding represents a change in the Saudi government’s strategy, as the interests in other companies are owned by the Ministry of Finance and not by the sovereign fund.

“This is an indication of a change in approach … With the Public Investment Fund owning the stake, it can now be seen as an investment opportunity,” said James Swanston, Middle East and North Africa economist at Capital Economics.

Jim Crane, a researcher at the Baker Institute at Rice University in the United States, said the role of the sovereign fund is to earn enough income through investments to develop new sectors in the Saudi economy, while the Ministry of Finance is more seen as the guardian of daily spending and less interested in strategies or appetite for risks.

Crane, author of “Energy Kingdoms: Oil and Political Survival in the Persian Gulf,” added that the sovereign fund “is essentially buying a stake in Prince Alwaleed’s successful investment record, and as long as Alwaleed can make bargains, the Saudis will benefit from it. “

One of the sources familiar with Kingdom Holding’s business said Prince Alwaleed’s investment style was based on new opportunities that could be highly profitable but also risky, as well as looking for undervalued stocks.

Prince Alwaleed became prominent on the international scene after his successful big bet on Citigroup in the 1990s, and he was one of the first investors in Apple.

The Prince and Kingdom Holding Company also made a $ 300 million joint investment in Twitter in 2011 and then increased its stake in 2015. Last month, he agreed to include a stake, now worth $ 1.89 billion, in Elon Musk’s acquisition rather than get his money back and forth.

Who’s after Al-Waleed?

Although the sovereign fund’s move could affect Alwaleed’s range of mobility, Kingdom Holding will benefit from the fund’s political and financial leverage when closing deals, the two sources told Kingdom Holding.

The Public Investment Fund has taken bold steps to strengthen its position in business and sport since becoming a more active investor in 2015.

The fund bought a $ 3.5 billion stake in Uber before listing its shares on the stock exchange, investing $ 45 billion in SoftBank’s technology fund, buying 80 per cent of British football club Newcastle United last year and rocking the golf world with the beginning of Saudi golf. League.

The Saudi Public Investment Fund currently manages assets valued at more than $ 600 billion, although the performance of its investment record was different, as it made huge profits from investing in Lucid to manufacture electric vehicles before its listing on the stock exchange, but its investment in SoftBank was more volatile after the impact of high prices and instability Politics on shares of technology companies that were achieving high growth.

The Sovereign Wealth Fund supports the Crown Prince’s huge projects in his plan to diversify the economy (Vision 2030).

Real estate consultant Knight Frank believes that projects to develop the emerging tourism sector in Saudi Arabia, which include the construction of a large futuristic green city called NEOM, will exceed $ 1 trillion at a cost of $ 500 billion.

But Riyadh has struggled to attract the required number of investors, and the sovereign fund could benefit from Prince Alwaleed’s relationships with major players in the hotel sector thanks to the interests it holds in the Four Seasons chains, Fairmont, Raffles and Swissôtel.

Despite Prince Al-Waleed’s wide fame, he remained close to his roots. He often travels to the heart of the Saudi desert, where he spends time with his guests and meets tribal sheiks and their families.

Three sources said his son, Khaled bin Al-Waleed, made his own way by investing in technology, real estate, food industries and chains of vegetarian restaurants, raising questions about who Prince Al-Waleed is in his business sector will follow up.

A source in the financial sector said that the Public Investment Fund could nominate another person who considers Al-Waleed as his successor in his business, adding: “If you take the prince out of the equation, it will only be a Saudi investment management company … I think many of these transactions would not have been possible without him. ”

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