The title of Prince Alwaleed bin Talal’s authorised biography says it all about how he would like to be perceived, says The Sunday Telegraph – Alwaleed: Businessman, Billionaire, Prince. To these, we might now add ‘loser’. The huge subprime losses at Citigroup, shares in which have plunged 32% this year, have hit all the bank’s shareholders hard. But none more so than “the Arabian Warren Buffett”, who has lost $4bn on his 10% stake, making him the biggest single victim of the crunch to date.
It’s hardly a moniker to be cherished by a proud Bedouin prince; and Alwaleed, who jets round the world in a custom Boeing 777 to monitor his investments, “will no doubt make his next trip to New York to make his presence felt”.
Still, he’s a philosophical man who’ll be reflecting that he’s been here before. He took quite a hiding on Citi shares in 1997; and it was a crisis at the bank (then Citicorp) that brought about his own great leap forward in 1991, when – as a relatively unknown Saudi financier – he invested $590m during the recession and watched his investment soar 20 times in value. That bold move made Alwaleed a business celebrity and his firm, Kingdom Holdings, an international force, says The Independent on Sunday.
And, while he may now be rethinking, the prince has so far repaid Citigroup with unconditional loyalty, often declaring that it is one of a handful of stocks he will never sell. If any man can be said to straddle East and West it is Alwaleed, a modern financier who nonetheless regularly holds court to thousands of followers at his traditional desert camps. His close family ties with the Saudi rulers – he is the nephew of the present king – have led to questions about his motives: some suspect the media-friendly prince of being a front-man for other mega-wealthy royals, says The Middle East Intelligence Bulletin. But this “doesn’t easily square” with reports of disputes with the Saudi establishment. The Times once dubbed him “the rogue prince” for his advocacy of reform and he recently made a point of making Saudi’s first female commercial airline pilot captain of his fleet. Indeed, says the FT, “half his entourage is female”.
Born in 1955, Alwaleed’s progressive roots run deep: his mother was the daughter of a former Lebanese prime minister and his father, Prince Talal (nicknamed “The Red Prince”) was exiled in the 1960s for his political views. He therefore grew up as a relative pauper by Saudi royal standards. Alwaleed learned the basics of business at Menlo College, San Francisco, in 1976, cutting his first deals in property during the heady years of the Saudi oil-boom.
The turning point was his move into the financial sector: long before his tilt on Citi, he invested in, and turned around, Saudi banks. Still, the prince’s emergence as the country’s leading global investor (prior to last week’s hit, Forbes listed him the world’s 13th-richest man with a $10bn fortune) has not come without cost. He refers to his investments as his “hundred wives” and they’ve often caused him trouble. He was slammed in 1997 when a broadcaster he owns staged the “Miss Arab of Israel” contest; and last year he overcame a fatwa to stage a 5% flotation of Kingdom Holdings. Establishing the Saudi exchange as a regional force is a long-term dream, but his real passion remains banks. “What’s at the heart of any country?” he asks. “It’s the economy. What’s at the heart of the economy? It’s banking.” Oh dear.
“When there’s a panic, I’m always happy”
It was Time magazine that first highlighted Prince Alwaleed’s buy-and-hold investment strategy and saddled him with the title of the “Arabian Warren Buffett”.
Yet there are striking differences between the pair, extending beyond Alwaleed’s glamorous lifestyle. “While the prince has displayed remarkable acumen in deciding when to buy stocks… he has demonstrated little knack for knowing when to sell,” says The Middle East Intelligence Bulletin. “In fact, he has rarely parted with any major investments.” Alwaleed makes no bones about attributing his reluctance to drop unprofitable investments to sentimentalism: “I fall in love, basically, with my companies.” But the upshot is that his overall returns have often been dire. “If the prince were an American mutual fund”, concluded The Economist in 1999, “his performance would rank in the bottom half of the industry”.
Alwaleed says that the big wins – such as his 1997 bet on the resurgence of Apple – far outweigh the non-performers. But given the importance of Citi to his portfolio, the events of the past few weeks must trouble him. And cracks may already be beginning to show. Alwaleed has been betting big on hotels, snapping up trophies, such as the London Savoy, and teaming up with Bill Gates earlier this year to take over Four Seasons Inc. “My Four Seasons shares will never be sold,” he declared. Yet this week, reports the Evening Standard, Kingdom Holdings quietly sold off the chain’s flagship Mayfair hotel for £70.5m.
“When there’s a panic, I’m always happy”, remarked the bargain-hunting prince in 2005. His sunny outlook may be sorely tested this time around.