Kingdom to obtain Citi shares
By Abeer Allam in Riyadh and Simeon Kerr
Published: January 5 2010 20:45 | Last updated: January 5 2010 21:10
Prince Alwaleed bin Talal al-Saud, the Saudi investor, revealed on Tuesday that he plans to shore up the balance sheet of his investment vehicle by “donating” SR2.24bn (€416m) of shares in Citigroup into it.
Prince Alwaleed said the initiative would help lead Kingdom Holding, which floated 5 per cent of its shares on the Saudi stock exchange in 2007, to profitability and enable it to distribute dividends to shareholders.
Citi’s insular focus has a price - Dec-17In depth: Citigroup - Oct-12Kingdom added that an extraordinary general meeting would be called to approve a reduction of the company’s share capital from SR63bn to SR37.5bn. The company’s shares will be consolidated, with every 17 shares reduced to 10.
“These measures will ensure the continuous development of Kingdom and help it withstand the negative repercussions of the global economic crisis,” Prince Alwaleed said. It would also allow Kingdom to increase borrowing capacity.
Kingdom’s share price collapsed from SR13 a share to a nadir of SR3.65 in March last year and, after a brief recovery, it has stagnated. It closed on Tuesday at SR4.70.
The company has been hit by a fall in the value of some of its holdings, including Citigroup.
On its website, Kingdom said it held a stake worth more than $9.2bn as of March 30 2007. However, Citigroup shares have fallen sharply amid the credit crisis, plunging 87.6 per cent in the past two years to $3.50 from $28.2 a share.
However, Kingdom reported last year that the market value of its “available-for-sale” investments reached SR5.8bn at August 31 compared with SR4.9bn in July. It said 83 per cent of the improvement came from a rally in Citigroup shares.
“When compared to February, the improvement in the market value of our available for sale investments was even more significant, it amounted to SR2.5bn or a 75 per cent increase,” Prince Alwaleed said.
Hisham Abu Jamee, chief investment officer at Bakheet Investment Group, said the injection of Citi shares and share consolidation would almost double the holding company’s book value per share from SR3.5.
While Kingdom forms the lion’s share of Prince Alwaleed’s wealth, he also has sizeable personal investments in regional and global companies, as well as a large real estate portfolio and a personal A380 “superjumbo”.
Prince Alwaleed said Kingdom remained committed to his real estate projects in Saudi Arabia, including plans for the world’s tallest tower in Jeddah.
Started in 1979, Kingdom has developed from a real estate and construction business into a diversified holding company with a broad range of assets from media to banking and hotels, including stakes in Apple and News Corp.
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"Prince Alwaleed said the initiative would help lead Kingdom Holding, which floated 5 per cent of its shares on the Saudi stock exchange in 2007, to profitability and enable it to distribute dividends to shareholders."
One has to ask how a transfer of (€416m) of shares in Citigroup will help *lead* Kingdom Holding to profitability and enable it to distribute dividends to shareholders.
Perhaps someone knows something.