Kingdom Holding, the investment firm of Prince Alwaleed bin Talal bin Abdulaziz Al Saud of Saudi Arabia, wants to buy US$375 million (Dh1.37 billion) worth of shares in its hotel division. The shares of Kingdom Hotel Investments (KHI) have not traded since January 11 of last year and are down 57 per cent since listing on NASDAQ Dubai in March 2006.
"The NASDAQ Dubai is not very liquid and [Kingdom Hotel's] move further points to the eventual winding down of the exchange," said Robert McKinnon, the chief investment officer at ASAS Capital. Billed as the bridge between the equity markets of Europe and East Asia when it launched as the Dubai International Finance Exchange in 2005, the bourse has struggled to attract listings or liquidity. There are 16 equity listings on the NASDAQ Dubai, only one of which, DP World, trades on a daily basis.
In January, the ports operator said it was eyeing a dual listing on the London Stock Exchange this year as it was not happy with the market price of the company. A Kingdom Holding unit would pay $5 for each KHI share in the recommended offer for a 44 per cent stake, a more than 25 per cent premium to the market price, Kingdom Holding said in a statement on the Saudi bourse website. KHI reported yesterday that its net profits rose 27 per cent last year to $21.8m compared with 2008, as the company sold four of its assets, including its interest in the Four Seasons Resort in Sharm el Sheikh.
KHI has ownership interests in 27 hotels in 18 countries, including Egypt, Lebanon and France. The sale of assets generated $87m in value and $37m gains, but the hotel industry suffered a difficult year globally. "The trading environment in 2009 remained challenging," said Sarmad Zok, the chief executive of KHI. This resulted in group revenues decreasing 12 per cent to $246.4m, the company said. "Revenue per available room declines slowed in the second half of the year as the overall portfolio proved resilient and the company benefited from the diversity of our properties by both geography and market segment."
KHI said it expected to register "mid single digit growth in revenue per available room" this year, "underpinned by good growth in Asia". Revenue per available room is the main indicator of the health of the industry. "We expect a shy and cautious recovery in a number of our markets," Mr Zok said. KHI has hotels under development in the Seychelles, Marrakech and Accra. The company said these projects were on track. KHI spent $181m last year advancing its development projects, it said.
* with agencies