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Tue 15 Jan 2008 04:18 PM

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Citigroup returns to its prince for fresh financing

Saudi Prince Alwaleed says he is among investors helping Citigroup raise $12.5bn.

Saudi Prince Alwaleed bin Talal said he is among investors helping Citigroup, which posted its first quarterly loss since its creation in 1998, to raise $12.5 billion in convertible preferred securities.

The investment is a "continuation of his strong support of Citigroup, and belief in its long-term success and profitability", the prince said in a statement on Tuesday.

The royal, a nephew of Saudi King Abdullah, is Citigroup's largest individual shareholder, owning 3.6% of the biggest US bank by assets through Kingdom Holding, which he controls. He owns 95% of the Riyadh-based firm.

P.J. Shoucair, Kingdom Holding's executive director for international investments, said the firm is not taking part in raising funds for Citigroup because it does not fit its investment strategy.

Prince Alwaleed "in his personal capacity participated in the private fund raising", Shoucair said in an email to newswire Reuters. "The Prince remains confident in Citigroup's future," he said.

The Saudi billionaire last came to the bank's aid in 1991, when he invested $590 million in Citigroup predecessor Citicorp, which needed cash as it struggled with Latin American loan losses and a collapse in US real estate prices.

"The size of Prince Alwaleed's investment in the convertible preferred securities is in line with maintaining his direct, and indirect interest through Kingdom Holding, below the 4.9% ownership threshold," the prince said in Tuesday's statement.

The US bank reported a $9.83 billion fourth-quarter loss on Tuesday.

Alwaleed began investing after graduating from California's Menlo College in 1979. A year later, he received a $300,000 loan from Saudi American Bank, which was run by Citicorp, according to his authorised biography "Alwaleed: Businessman, Billionaire, Prince," written by former Cable News Network host Riz Khan.

The prince is now the world's 13th richest man, according to Forbes magazine.

Citigroup shares fell 3.4% to $28.06 in pre-trading after the fourth-quarter earnings were announced.

Alwaleed originally paid $2.75 per Citigroup share, adjusted for stock splits, he said in a Fortune magazine interview published in November. (Reuters)

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