In a candid interview at his offices in Riyadh, the prince explains why he has been vindicated with the investments he made - and those he didn’t
Half way through the interview with HRH Prince Alwaleed, there is a surreal moment. We are discussing the phenomenal 147 percent rise in Kingdom Holding’s share price over the past twelve months, when he drops his bombshell.
“You know something? My salary is actually very reasonable. I get paid one riyal a year, and also I charge Kingdom Holding one riyal a year to lease this floor at Kingdom Centre. So in six years since going public, I have earned just twelve riyals.”
That’s it? Twelve riyals? Are things really that bad? “Well, I say twelve riyals, but they haven’t even paid me yet! Kingdom still owes me the money — and feel free to put that in your story.”
But there is no need to feel sorry for the prince any more than the American people felt sorry for President Kennedy when he dispensed with his presidential salary and took only one dollar as his annual compensation. The rapid rise in the price of KHC stock means that the prince’s 95 percent stake in the company, together with his private assets, which include real estate and other local, regional and international assets, and Rotana, which is 80 percent owned by the prince now bring his total wealth to $25.9bn (see page 24). For the ninth year running, he has topped the Arabian Business Rich List. Coming on the back of his pole position for nine successive years on the Arabian Business Power List, there aren’t any bigger and better success stories to be found. Power. Fame. Fortune. He’s got the lot, and things just seem to get better each year.
But it’s the last twelve months that have, even by his standards, been extraordinary, with KH’s investment strategy across thirteen different sectors paying off big time. He withstood calls to withdraw from News Corp after the phone hacking scandal, and has now seen its share price hit a five-year high. He resisted the pressure to jump on the Facebook bandwagon before its disastrous IPO, and was savvy enough to nab a $300m investment in Twitter last December, which observers suggest has rocketed in value. And his decision to stick with Citigroup through many years of thick and thin also now looks completely vindicated.
We meet on the 66th floor of Kingdom Centre in Riyadh, where the prince is, as always, surrounded by rows of TV screens showing the latest market news from around the globe, cameras that record his every media interview, and his core staff. But he looks relaxed and upbeat, and, if anything, a little mischievous. I hand him a piece of paper charting the rise in his stock price over the past twelve months, and he reads it carefully. “Frankly speaking, when you gave me this I didn’t know it was 147 percent up because I don’t calculate that every day.”
Seriously? “Ok,” he says with a smile. “I know I am up but I didn’t know by this much — but it’s a very pleasant number and we welcome it as it shows that my shareholders at Kingdom have benefited too.”
He adds: “For any chairman or CEO of a company, the main yardstick of the success comes from the strength of his balance sheet, the growth in income and the performance of his share price. These are the three indicators of success at the end of the year. In all these three, I say thanks to KH members — I never use the word employees. They number 24 people. That’s it. This is to the credit of all the members who contributed to this success. The share-price movement reflects the performance of the company.”
Few can argue with the numbers: second-quarter results for this year show a net profit of SR178.9m ($47.70m), compared to SR163.5m in the same period a year earlier. That equates to a 9.4 percent rise, while first-quarter profits went up 11.3 percent, thanks in part to the sales of its stake in Toronto’s Four Seasons Hotel and its share of the Oasis Kingdom project in Riyadh.
He explains: “We are long-term investors, we are not short term. When the crisis hit the whole world, many companies were forced to liquidate and sell many of their assets. We have a very diversified portfolio, and so we were able to withstand the major meltdown in the international markets. We did not really sell, we are in thirteen industries; financial services, real estate, hotel management, hotel real estate, aviation, petrochemical, media and publishing, entertainment, private equity, healthcare and education, consumer and retail, agriculture, various African investments and we are not obliged to sell.”
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