Prince Al-Waleed Bin Talal is a member of the Saudi Royal Family. He is the nephew of the Saudi Arabian King Abdullah. An entrepreneur and international investor but without real political power within the House of Saud or in Saudi Arabia, he has amassed a fortune through investments in real estate and the stock market.
As of August 2009, his net worth is estimated at US$16.3 billion, down from $21 billion, according to the Arabian Business rich list published August 29, 2009.He is ranked by Forbes as the 22nd richest person in the world. He has been nicknamed by Time magazine as the "Arabian Warren Buffett".
Investing in Citigroup
His stake in Citibank once accounted for approximately half of his wealth, prior to the recent financial crisis. At the end of 1990 he bought 4.9% of Citicorp’s existing common shares for $207m ($12.46 per share)—the most that he could without being legally obliged to declare his interest. In February 1991, as American troops stationed in Saudi Arabia were preparing for war with Iraq, the prince spent $590m buying new preferred shares, convertible into common shares at $16 each. This amounted to a further 10% of Citicorp and took his stake to 14.9%. In January 2008, the Prince participated—together with the Singapore government investment corporation and other investors—in a $12.5 Billion capital raise, in an unsuccessful effort to shore up Citi's capital position, but the value of these shares continued to plunge.
Recently, Steven Forbes interviewed the Prince billionaire and he commented, among other things, his investment in Citigroup and News Corp. Here is a excerpt related to these two companies
Click on the picture below to go to www.forbes.com to watch the interview video and transcript in full length. The Prince is very knowledgeable about what is going on around the world in the business world. His hand-on experience in the banking and real estate industry makes this interview very worthy the while.
As of August 2009, his net worth is estimated at US$16.3 billion, down from $21 billion, according to the Arabian Business rich list published August 29, 2009.He is ranked by Forbes as the 22nd richest person in the world. He has been nicknamed by Time magazine as the "Arabian Warren Buffett".
Investing in Citigroup
His stake in Citibank once accounted for approximately half of his wealth, prior to the recent financial crisis. At the end of 1990 he bought 4.9% of Citicorp’s existing common shares for $207m ($12.46 per share)—the most that he could without being legally obliged to declare his interest. In February 1991, as American troops stationed in Saudi Arabia were preparing for war with Iraq, the prince spent $590m buying new preferred shares, convertible into common shares at $16 each. This amounted to a further 10% of Citicorp and took his stake to 14.9%. In January 2008, the Prince participated—together with the Singapore government investment corporation and other investors—in a $12.5 Billion capital raise, in an unsuccessful effort to shore up Citi's capital position, but the value of these shares continued to plunge.
Recently, Steven Forbes interviewed the Prince billionaire and he commented, among other things, his investment in Citigroup and News Corp. Here is a excerpt related to these two companies
I invested in Citigroup in 1991 when the bank was savings, basically, at that time. And the investment blew up substantially. But then, as you know, it faced all these big crises in the past two years. And then we invested again, besides some sovereign funds -- Abu Dhabi, Singapore and the Kuwaitis -- we invested a huge amount also. And then we converted at a relatively low price, at 3.25, the exact same price that the government converted for.
Forbes: Right.
So right now we hope that the worst is over, and I met Vikram, and I told him that, you know, "The honeymoon is over now, and 2010 has to be the year whereby you begin showing the world that you are a force to be reckoned with. And get back Citigroup's name to where it was pre 2007 crisis."
How hard did he gulp?
Bin Talal: Well, you know, so far, Vikram has really been executing very meticulously since he took over at the end of 2007. But I told him,"The honeymoon is over right now." So he had two years, two, three years of honeymoon. But I think now, you pay TARP. The worst of the economic crisis, the worst of the credit crisis behind you. The exposure of Citibank in the commercial --
Real estate.
Is minimal, and the commercial debt is very minimal. So the only real issue that they have right now is the consumers, and more specifically, the mortgage.
So, and they are monitoring the unemployment number very closely because it's very much that linked to the delinquency rates that may affect, negatively or positively, Citibank.
Are they going to have any major initiatives in 2010 or is it going to be more trying to grow what they have?
You know, I think the growth will be organic in Citibank. But the big issue right now is how to unload old assets in Citi Holding, which is really the bank that they want to get rid of. That's where all the controversial and noise-making assets are parked in.
Forbes: Seems if they had not done, though, that expansion 10 years ago, it would've been in much better shape today.
Well, I mean, at that time the one-stop shopping was the model.
Right.
And it clearly backfired. And frankly speaking, right now they're going back to the pre-merger with Travelers, whereby you're going back to bread and butter, elementary, 101 business of being Citibank, and taking all of those extra things that really caused Citibank to be in this crisis lately. You're right.
Forbes: Are you interested in other financial companies or is Citi enough for you?
No, no, I mean, we're invested in Citi right now because we are diversified geographically and by industry. So we're happy with Citibank right now and, you know, the average right now is 3.25, so there's the potential for this thing to grow too, and hopefully double and triple in the coming two, three, or four years, provided that the new management, headed by Vikram, delivers on its plan.
Forbes: It seems a number of sovereign wealth funds invested in other banks are remembering how well you did 20 years ago. Do they still have the same faith that you have that these things can be turned around?
Well, it depends. For example, the Singapore wealth fund has sold half its stake, and they are back now to 5% in Citigroup. Kuwait, for example, they have exited the investment in Citi. And some other sovereign funds, they are still remaining with some British banks that they invested in during the crisis, but some of them exited. So really it varies depending on their internal situation.
Media Holdings
You have some holdings in media companies, which obviously interests us. And how do you see the media world now? You have News Corp. and you also have a very large company in your region?
Exactly, yes. You know, we are the second biggest shareholder after the Murdoch family in News Corp, and we have smaller stakes in Disney and Time Warner and we are partners with Disney and Euro Disney in Paris. And yes, we do have a big media company in the Arab world that covers all the main region, the Middle East, North Africa region.
And we have around 45% of all the movies and we have around 80% of all the music there and we are using technology to advance our causes there. We have some magazine, we have some cafes. So, yes, we're a very dominant force in the music and the movie industry in the Arab world through Rotana.
So what do you see ahead for media companies in the West? They've gone through a very difficult time, like some of the banks have.
Bin Talal: Yes, but we're seeing now, they're coming back very strongly. And I just met with Mr. Murdoch yesterday, and he was very bullish about the future, the near future growth of News Corp. And you know, their one movie, as an example, Avatar, is going to gross more than $2 billion within two months. So and it is going to go to the bottom line, hundreds of million dollars. So, one movie, look what could happen, what it could do to one company. So News Corp really is the only really global company that's available in the five continents. And my alliance with them has been there since more than, you know, two decades.
Are there any other media companies you want to make new investments in?
Bin Talal: No, I think right now I have a very strong presence in the Middle East through Rotana, and I have some business in the United States, and the globe, Europe, through my alliance with Mr. Murdoch and News Corp. And there are some more small assets here and there, but I think at this stage now, I mean, the investments in these companies, around $3, $4 billion. So we are very happy with that.
Click on the picture below to go to www.forbes.com to watch the interview video and transcript in full length. The Prince is very knowledgeable about what is going on around the world in the business world. His hand-on experience in the banking and real estate industry makes this interview very worthy the while.
