By Ben Flanagan
Following our exclusive account of a day in HRH Prince Alwaleed's life, we examine how his business empire grew.
This is not, by any stretch of the imagination, a ‘rags to riches’ story. But the life of Prince Alwaleed – who, having started his investment career with a $30,000 loan from his father, has now amassed a $23bn empire – is just as inspirational.
Prince Alwaleed bin Talal bin Abdul Aziz Al Saud was born in Riyadh on 7th March 1955, to no humble background. His father is Prince Talal, son of the founding king of Saudi Arabia and half brother to King Abdullah; his mother Princess Mona El-Solh, daughter of the first Prime Minister of modern day Lebanon.
Aged 24, Prince Alwaleed completed a Bachelor of Science degree in Business Administration at Menlo College, USA. The college – in the San Francisco Bay area at the heart of Silicon Valley – specialises in Management and ‘Liberal Arts’ courses. He would later go on to complete an MA in Social Science at Syracuse University, New York state, in 1985.
It was the same year that he left Menlo College, 1979, that Alwaleed’s father gave him the $30,000 loan, plus a $300,000 mortgage on house. The following year, the Prince established Kingdom Holding Company in Riyadh, housed – according to its website – in ‘a small pre-fabricated office’.
Perhaps not even Alwaleed himself could have guessed that its headquarters would one day be housed in the tallest skyscraper in Saudi Arabia.
In 1991 Alwaleed invested $590m in Citicorp (now known as Citigroup), building on his existing $207m stake. The company would continue to make up the majority of Alwaleed’s portfolio. In 2002, for example, the Prince announced that he had bought an additional $500 million stake in the company, and the investment currently accounts for nearly half of his worth.
The Prince – who is occasionally very vocal in his criticism of the company’s management – currently owns a stake in Citigroup of around 4.3%.
This key investment was followed by others in the next two years, including $100m - or roughly a 10% stake - in Saks Fifth Avenue, and $240m for 30% stake in Arab Radio & Television.
In 1992, the Prince was awarded an honorary Doctorate of Humane Letters by the University of New Haven. And the following year he was named top Saudi businessman in an opinion poll held by leading Saudi business newspaper Al-Eqtisadiah.
One of Alwaleed's key investments of 1994 was a 22% stake in Four Seasons Hotels Inc., valued at the time at $120m. Later, in 2006, he and fellow billionaire Bill Gates would form a plan to buy the Four Seasons group outright; the deal - thought to be worth $3.37bn - was agreed in 2007.
Alwaleed's interest in hotel and hospitality businesses is by no means restricted to Four Seasons. In 1994 he also acquired a 50% stake in the Fairmont hotel chain and spent $345m acquiring 24% of Disneyland Paris. He was later required to give the latter a cash boost when it experienced difficulties.
Alwaleed also acquired a 3% stake in Dutch construction company Ballast Nedam Group in 1994.
In 1995 Prince Alwaleed’s name hit the headlines in the UK when he became one of the investors who rescued Canary Wharf, the business district to the east of the City of London. He spent $65m on a 6% stake after Canary Wharf went into administration in 1992.
In 2001 it was reported that the Prince raised $178m by selling most of this investment, the value of which had more than quadrupled over the years.
However, today he is still part of the group that controls Canary Wharf, along with Morgan Stanley, New York-based Simon Glick and British Land Co. Plc.
Other investments in 1995 include a 42% stake in the New York Plaza Hotel, which Alwaleed would later sell, and a $100m investment to buy 2.3% of Mediaset SPA.
He was also voted Gulf Businessman of the Year at a conference held in the United Arab Emirates.
A high profile investment in 1996 was the George V Hotel in Paris, for which Alwaleed paid $185m. However, it was reported that the Prince spent a further $120m on the complete renovation of the hotel, which took place over the course of two years under the auspices of the Four Seasons group.
The year also saw Alwaleed forming a $70m venture with Arab Jordan Investment Bank to develop the Four Seasons Amman, and the acquisition of a 50% stake in the Cairo Nile Plaza Complex.
The Prince was also named top Saudi businessman by the Al-Eqtisadiah newspaper, after it conducted a public poll in which he won 52.4% of the votes.
In 1997 Prince Alwaleed made a string of investments, including $400m on 5% of the preferred shares of News Corp. He also took a 5% stake in Apple Computers Inc. for $115m, 5% of Netscape (which later became part of TIME/Warner) for $146m, and invested $300m in Motorola.
Other investments included a 27% stake in Movenpick Hotels & Resorts, $10m in the Palestine Investment and Development Company and $5m in Jerusalem Development and Investment Company.
The Prince was named the second most successful and creative investor among the global power elite by Forbes magazine, which also ranked him the 13th wealthiest person in the world.
He was also awarded the Star Decoration of the First Order by the late King Hussein Bin Talal of Jordan, in recognition of his regional and international investments and philanthropy.
In 1998 Prince Alwaleed made a number of investments in Africa, a continent which he praises for its investment value in today’s interview with Arabian Business magazine.
These investments included a 13.7% stake in United Bank for Africa, a 10% stake in the Senegal telecoms operator Sonatel and also the purchase of 100,000 acres of land in Tushka, Egypt, for agricultural development.
In the same year Alwaleed was awarded a doctorate in Business Management by Kyungwon University in Seoul, Korea. Forbes ranked him the tenth wealthiest – and second smartest – businessman in the world.
In 1998 Prince Alwaleed was pictured standing with his Lebanese mother and his aunt at the feet of the statue of his late grandfather Riad Solh, who was Lebanon's prime minister at the country's 1943 independence from France.
The bronze statue, first erect in downtown Beirut in 1957, was moved to Damascus after heavy damage inflicted at the outbreak of the 1975-1990 civil war. It was inaugurated in an official ceremony attended by top Lebanese officials after long months of restoration in 1998.
In 1999 Alwaleed raised his News Corp stake to $600m and bought a 14% stake in CAL Merchant Bank Ltd in Ghana.
Warren Buffett - the American investor to which Alwaleed is, apparently, delighted to be compared - wrote to the Prince in 1999 to complement him on the refurbished Plaza Hotel. According to Forbes, Buffett wrote that Alwaleed had "restored The Plaza to its former luster."
Forbes magazine ranked him the eighth wealthiest person in the world; other high points for Alwaleed in 1999 include the award of a Presidential Medal by the University of New Haven, and a Doctorate in Law from Syracuse University.
In 2000, Alwaleed invested $400 million in Compaq Computer Corp., the world's then second largest computer company and largest supplier of computer systems. Two years later the company merged with HP, creating the world's leading consumer technology company.
The year saw the Prince make a string of investments in internet companies, including $50m in eBay, $50m in travel website priceline.com and $50m in Amazon.com. He also purchased a $100m stake in Kodak, $5m in Procter & Gamble, $50m in PepsiCo, $50m in Ford Motor Company and $50m in Walt Disney.
This year Prince Alwaleed was ranked the fifth wealthiest person in the world by Forbes, and the Guinness World Records Book said he was the wealthiest in Asia and outside the U.S. The Arab News and Al-Eqtisadiah Newspapers chose Kingdom Holding number one among the top 100 companies in Saudi Arabia.
Also in 2000, Prince Alwaleed visited the Gaza Strip where he inaugurated the Center for Children with Down's syndrome, according to the Kingdom Holding website. A year before, Prince Alwaleed had donated $400,000 for the completion of the centre. He also donated $1 million for the restoration project of the historic Omari mosque in downtown Gaza.
Shortly after the 11 September, 2001 attacks on the U.S., Prince Alwaleed went on a tour of the Ground Zero site and offered a $10m donation to the relief efforts. However, his donation was turned down by the then mayor Rudy Giuliani, who objected to the Prince’s suggestion that U.S. policies in the Middle East had contributed to the attacks.
According to Time magazine, Alwaleed's cheque was accompanied by a press release in which the Prince said it was time to get to the roots of the problem in the Middle East, which included Palestinians "slaughtered" by Israel "while the world turns the other cheek."
"I entirely reject that statement," Giuliani was quoted by CNN as saying. "There is no moral equivalent for this [terrorist] act. There is no justification for it. The people who did it lost any right to ask for justification for it when they slaughtered 4,000 or 5,000 innocent people."
Alwaleed’s thoughts on 9/11 are well documented. “The crisis, the terrorist act which took place here, mixed American blood with Saudi blood,” Alwaleed told Time magazine in 2003.
Alwaleed’s investment activity in 2001 included the upping of his stake in the New York Plaza Hotel to 50%. He would go on to sell the stake in 2004. He also raised his stake in TIME/Warner to more than $1bn, and his stake in priceline.com to 5.4%.
It was the year that Forbes magazine ranked Prince Alwaleed the sixth wealthiest person in the world, the Guinness World Records Book ranked him the wealthiest in Asia and outside the U.S., and Time magazine said he was among the 25 Most Influential Global Business Executives.
The Kingdom Centre in Riyadh, owned by Prince Alwaleed, was completed in 2002. Built at a cost of $466m, it is the tallest skyscraper in Saudi Arabia at 302m and the 25th tallest building in the world. The tower is home to the highest mosque in world and has a ladies' floor where women do not have to cover their faces.
Other notable events for Alwaleed's business empire included the inauguration of the $120m Sharm El-Sheikh Four Seasons Resort, and the Compaq merger with HP.
Prince Alwaleed was named the wealthiest person outside the U.S. by Forbes magazine. The year also saw him awarded an honorary Doctorate in Law by Exeter University, as well as a Doctorate in Law from the American University in Cairo.
He also won the ITP Lifetime Achievement Award, presented to him by His Highness General Sheikh Mohammed bin Rashid Al Maktoum in recognition of the Prince's prowess as an investor, and efforts to aid poor and promote better understanding between the Islamic and Arab world and the West.
Alwaleed invested in a number of companies in 2003, including the acquisition of nearly 5% of International Financial Advisors Company (IFA), 49% of LBC Sat, and raising his Movenpick Hotels & Resorts stake to 33.3%. The Prince reduced his stake in Arab Radio & Television to 5%; a Fairmont hotel chain share swap landed him a 4.9% stake in the parent company of Fairmont Hotels & Resorts.
Forbes magazine ranked Prince Alwaleed both the fifth wealthiest person in the world, and the wealthiest investor outside the U.S.
Also this year, Prince Alwaleed found time to watch a polo game at the Guards Club in Windsor, England, with HM Queen Elizabeth. The game saw Prince Harry score three goals for Highgrove, leading the team to victory against the GCC. The event was co-sponsored by Jebel Ali International Hotels of Dubai.
An important meeting occurred in early 2004. Alwaleed attended a dinner at the Washington home of fellow billionaire Bill Gates. Following the meeting, Alwaleed agreed to explore ways of assisting Microsoft's expansion in Saudi Arabia, according to the government-owned Saudi Press Agency. The two men also agreed to jointly support "selected humanitarian projects in Saudi Arabia".
It has also been speculated that the meeting may have been a precursor to the deal – finalised in 2007 – to buy the Four Seasons group for $3.37bn
2004 was also the year that Alwaleed sold his 50% stake in Plaza Operating Partners, owners of the prestigious but then underperforming Plaza Hotel in New York. CPS One, an affiliate of U.S. property investment group El Ad Properties, also bought the 50% stake owned by International hotel group Millennium & Copthorne in a deal that totaled $675 million.
It is thought that Alwaleed used the proceeds of this sale to buy stakes in Monaco's Monte Carlo Grand, and – in 2005 – London's Savoy Hotel.
Other deals in 2004 included a 5% acquisition of Kuwait Invest Holding Company, an agreement to acquire a 40% stake in Consulting Clinics Beirut, and a $35m investment in the Pan-African Investment Partners fund and the Pan-Commonwealth African Partners fund.
Awards Alwaleed received in 2004 include a lifetime achievement award from Lebanese President Gen. Emile Lahoud, while KHC was recognised by the Riyadh Chamber of Commerce for Housing and Fighting Poverty in Saudi Arabia. Forbes magazine ranked Alwaleed the fourth wealthiest person in the world.
Alwaleed hired, through Kingdom Holding Company, the first female airplane pilot in Saudi Arabia in November 2004. In a country where women still can't legally drive, Alwaleed’s move was typical of his support for women’s rights.
“I see the hiring of this female pilot to work on Kingdom Holding’s fleet of private jets as a historic move for Saudi ladies,” he told the press at the time. “The move transcends the traditional role of Saudi women previously confined to working in the health, education and philanthropic sectors. I am in full support of Saudi ladies working in all fields.”
On 19 January 2005 it was announced that Alwaleed’s Kingdom Hotels International (KHI) had bought the Savoy Hotel in London from Irish investment fund Quinlan Private for an estimated GDP250m. KHI had teamed up with Bank of Scotland and Canadian-based Fairmont Hotels & Resorts, in which Alwaleed has an estimated 16% stake, and which were appointed to manage the hotel.
“As a long-term investor in Fairmont and Fairmont hotel properties, we believe our joint ventures focus on European luxury hotel acquisitions is an excellent strategic choice for growth. The Savoy Hotel is a wonderful addition to Kingdom’s portfolio and is truly one of the finest hotels in Europe", said Prince Alwaleed in a press statement.
The £800m joint venture between KHI, BoS and Fairmont is thought to have been established in September 2004. In December of that year the formation of the three-way consortium was announced, along with the purchase of another of Europe’s finest hotels – the Monte Carlo Grand.
Also in 2005, Alwaleed increased his holding News Corp. to 5.46% of the voting share, and reaffirmed his support for chairman Rupert Murdoch. This followed hints from Liberty Media CEO John Malone that he might attempt a takeover of News Corp, according to CNN.
As well as numerous honorary citizenships and awards, in 2005 Prince Alwaleed was named the fifth wealthiest person in the world by Forbes magazine, and ranked in the top ten of Fortune magazine’s Asia's Most Powerful List.
On 1 March 2006, Prince Alwaleed's hospitality company, Kingdom Hotels, was listed on the Dubai International Financial Exchange and the London Stock Exchange. The move looked like a precursor to a floatation of the Kingdom Holding Company (KHC).
"Kingdom Hotels [will] go public in Dubai and London. But Kingdom Holdings, that must go public here, that's for sure. Because half of my investments are in Saudi Arabia," Alwaleed told Forbes.com in an interview published on February 20 th .
But Alwaleed was not to know what the next few weeks would bring. David A. Andelman, the journalist who interviewed Alwaleed, wrote in the article that "the Saudi Stock Exchange is scarcely at the bottom. Yesterday, its benchmark Tasi index topped out at 20,000. It's up 20% so far this year and has doubled since last April. Some fear a bubble, but not Prince Alwaleed."
However, just five days later, on February 25, the Saudi exchange index peaked - and then plunged by 28.9% in just three weeks.
This prompted Alwaleed to make a pledge: on March 15 2006 he promised to pump between SAR5bn-SAR10bn ($1.3bn-$2.6bn) into the Saudi stock market following the disastrous losses. This he did - at the lower end of that scale: in January 2007 he announced he had invested $1.3bn in Saudi shares.
And Alwaleed did not desert his plans to list Kingdom Holding in Saudi: in August KHC confirmed that it was still considering an IPO, although did not specify a date. The $7bn float of 30% of the company would probably see a primary listing on the Saudi Arabia exchange, said sources at the time.
In July, Prince Alwaleed proved that he was no shy or retiring investor, when he publicly criticised Citigroup, in which he holds a 4.3% stake. The Prince told the Reuters news agency on July 18 th that shareholder patience was wearing thin over rising costs at the U.S. bank. "We have to take draconian, and I say draconian, measures to control the costs," he said.
"There has to be a correlation between the one dollar spent and the one dollar of revenue," he said. "I'm patient, but enough is enough."
Notable investments in 2006 included Alwaleed's partnership with U.S. real estate firm Colony Capital to buy Fairmont Hotels & Resorts for roughly $3.9 billion.
2006 was also a year when the Prince received yet more honours. In April, he was awarded Pakistan's highest civil award, "Hialal-i-Pakistan", in recognition for his donations to the survivors of 7.6-magnitude South Asian earthquake in 2005, which killed more than 73,000 people in Pakistan and left around three million homeless.
If there’s one person that could send a positive signal to dismayed Saudi investors, then it‘s Prince Alwaleed.
Perhaps that’s why HRH announced in January he had invested $1.3bn in Saudi shares to ‘bring back confidence’ to the flagging market. The Prince had pledged a big investment back in March 2006, after the market plunged 28.9% in three weeks. Still, the market is down by around 7.5% this year, after plummeting by 52.5% in 2006.
Also this year, Alwaleed teamed up with fellow billionaire and Microsoft chairman Bill Gates to buy the Four Seasons group for US$3.37bn. The news of the proposed deal broke in 2006, but was finally agreed this year.
Kingdom Holding also emerged as one of the bidder for the third Saudi mobile licence , as part of a consortium with four other billionaires.
But the news was not all good. Just one year after its Dubai and London listings Kingdom Hotel Investments was forced to issue a profits warning in March . The company reported poor trading at its hotels in Damascus, the Red Sea and Mauritius. However, a few weeks later it announced a joint venture in the Philippines worth $152m. There were also rumours this year that Alwaleed is planning a hotel in Tel Aviv .
In March, Prince Alwaleed was named the world’s most powerful Arab by Arabian Business magazine for the third year running. Just one month later, Kingdom Holding Company came top in a list of the Gulf’s fifty most admired companies , also prepared by Arabian Business magazine. The magazine said that the company ‘continues to go from strength to strength’.
But – given the scale of Alwaleed’s business empire, and his sheer ambition – perhaps we can’t rule this, or anything else, out.