Kingdom Holding likely to retain assets following Alwaleed arrest
Investment vehicle retains support of Saudi government
Nearly a week on from the detention of Saudi billionaire businessman Prince Alwaleed bin Talal, questions remain about the future of his high-profile investments in some of the world’s largest companies.
Prince Alwaleed was detained on Saturday in the wake of an investigation launched by Saudi Arabia’s newly established anti-corruption committee, chaired by Crown Prince Mohammed bin Salman, alongside several other prominent businessmen, marking a dramatic fall from grace for one of the country’s most prominent businessmen.
But analysts suggest that Kingdom Holding Company (KHC), his investment vehicle, will hold onto its shareholdings in companies such as Four Seasons Hotels and Resorts, Citigroup, Twitter, Daimler, AccorHotels and Apple.
“From a fundamentals standpoint, the company’s position is very strong, backed by the quality of its assets,” said Meriem Kaddour, an analyst with Alphamena in Tunis.
“There is no reason for them to be selling assets, as the company is not in cash trouble, as their recent results confirm.”
KHC earlier this week reported a 247.5 million Saudi riyal (Dh242m) profit for the third quarter, compared with a restated loss of 355m riyal for the same period last year.
KHC’s chief executive Talal Al Maiman insisted earlier this week that the company’s strategy “remains intact” and that it retained the support of the Saudi government.
“I suspect the government will punish the individuals accused of corruption but mostly leave their companies alone,” said a Middle East economist who asked not to be named.
“The government is unlikely to come down too hard on companies such as KHC and Al Tayyar for fear of scaring away local and foreign investors, which it’s increasingly trying to bring into the country.”
Nasser Al Tayyar, founder of Al Tayyar Travel, was also among those arrested earlier in the week.
It emerged on Thursday that KHC had divested the remaining 5 per cent stake in Rupert Murdoch’s 21st Century Fox since the end of the last quarter. It is not known whether the sale of the shares had any connection to the anti-corruption drive, or who they were sold to.
"Alwaleed is a key ally of Murdoch, so at a time when there's speculation over the future of Fox, it adds to the question marks,” said Alex DeGroote, media analyst at Cenkos Securities.
“Previously, Murdoch could count on the support of Alwaleed in votes, but not anymore. Whoever takes up this stake later may or may not be as supportive.”
The mood among other companies that KHC has invested in remains one of business as usual, for now at least.
Twitter shares fell 2.6 per cent on Monday following news of Alwaleed’s arrest, but have since recovered ground.
A Twitter spokesman declined to comment on the impact of the arrest on the company.
Four Seasons Hotel Group said this week that it was “business as usual” for the hospitality operator.
Egyptian real estate developer Talaat Moustafa Group, which is partnering with KHC for the expansion of the Four Seasons hotel in Sharm Al Shaikh, said in a stock exchange statement on Tuesday that the expansion was self-financed, and that KHC had no investment in the company.
Ride-sharing app Careem, in which Alwaleed invested in June together with Daimler, had a similar message.
"This matter does not affect the day to day operations of Careem,” a senior spokesperson told The National on Thursday. “We continue to simplify and improve the lives of people across the Kingdom and our network."
Citigroup chief executive on Thursday described Alwaleed as “a very consistent, loyal supporter” in an interview with Bloomberg, while also hailing the country’s increasing openness.
Updated: November 9, 2017 09:09 PM