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Tue 5 Jan 2010 09:59 PM

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Prince Alwaleed moves 180m Citi shares to Kingdom

Share transfer to help Kingdom withstand 'negative repercussions' of GFC - Alwaleed.

Saudi Arabia’s Prince Alwaleed bin Talal, Citigroup Inc’s largest individual investor, transferred 180 million of the bank’s shares to Kingdom Holding Co to improve profitability and borrowing opportunities.

The shares are worth $600 million, Riyadh based Kingdom Holding said in an emailed statement today.

Kingdom will have an “additional benefit of $179.99 million for every $1 increase in the share price of Citigroup,” the company added.

In a statement, Prince Alwaleed said: "The share transfer will help Kingdom Holding withstand the negative repercussions of the global economic crisis.”

He added: “I personally re affirm my full and continuous support to Kingdom Holding, and my initiative to transfer part of my own Citigroup shares is an example of that.”

Alwaleed personally held about 218 million Citigroup shares as of November 2008, according to data compiled by Bloomberg. He owns 95 percent of Kingdom Holding, his investment company, the data shows.

The global credit crisis has hurt investment and energy companies operating in Saudi Arabia, the Arab world’s biggest economy.

Kingdom Holding reported a 54 percent decline in third quarter net income because of a decrease in returns on investments in Saudi Arabia and abroad.

Speaking from Riyadh, John Sfakianakis, chief economist at Banque Saudi Fransi, said: "Kingdom Holding is better off if it has additional assets."

He added: "Kingdom Holding lending facilities could increase if its asset base is larger, including with more Citigroup shares, as it expands its operations."

Kingdom Holding also received approval today from the Saudi Capital Market Authority to lower its share capital to $9.89 billion from $16.79 billion, according to a regulatory statement on the Saudi bourse.

The number of outstanding shares will fall to 3.71 billion from 6.3 billion.

In a statement, the company said: "These decisions will lead the company to profitability and enable Kingdom Holding to distribute dividends to shareholders.”

They added that the decisions will increase its “future borrowing capacity.”

Prince Alwaleed sold 315 million shares of Kingdom Holding at $2.73 apiece in July 2007. Saudi institutional and individual investors asked for more than twice that amount in the share sale.

The shares have declined more than 50 percent since their listing.

Kingdom shares ended unchanged at $1.25 in Riyadh today. The company, worth $7.89 billion, is ranked 12th on the Saudi bourse by market value.

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