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Kingdom Holding shows faith in Saudi market, to invest $1 billion

Kingdom Holding is showing strong faith in the Saudi market, with a major investment incoming.

What else is on the books?

$1 billion in 6 months

Attending the World Economic Forum in Davos, Switzerland, Kingdom Holding CEO Talal Ibrahim Al Maiman told CNN that his company plans to invest $1 billion in Saudi within the next 6 months.

“We believe there are better opportunities in Saudi Arabia and the region today,” Al Maiman told CNN Business’ Emerging Markets Editor John Defterios. “Much better multiples and greater potential.”

Saudi Prince Waleed Bin Talal holds 95% ownership of Kingdom Holding, and his company has stakes in all manner of local and international businesses.

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Working hand in hand with the government

With its latest announcement, Kingdom Holding is echoing state sentiment in regards to local spending. Al Maiman’s statements fit with Saudi wanting to encourage local investment, particularly in non-oil sectors. Reuters explains that this is “in an effort to spur economic growth that has been hurt by low oil prices.”

According to Reuters, “the economy shrank , and although the government estimates it grew 2.3% in 2018, that is much slower than the boom years early this decade – and not enough to put much of a dent in a record jobless rate of 12.9% among Saudis.”

“I hope for to size things as they are,” Al Maiman said. “We are putting our money in Saudi Arabia. And therefore, I hope this is an invitation to everyone to reconsider and come to Saudi Arabia.”

Further to this, a 2018 interview by Bloomberg with Prince Al Waleed revealed that his company is cooperating with the Public investment Fund (PIF), Saudi’s sovereign wealth fund, to collaborate on several projects. This is in an attempt to push forward with Vision 2030, Crown Prince Mohammad Bin Salman’s plan to diversify the country’s income away from oil.

Saudi’s PIF primarily engages in foreign investments, such as those in tech companies such as Uber. It does, however, also reinvest excess returns into the Kingdom, such as the projects it seeks to involve Kingdom Holding in.

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The company has yet to share a 2018 annual report

In the company’s latest earnings report revealed to the media, that being the Q2 2018 earnings call, it reported a 12% increase in net profits. However, the detaining of Prince Waleed in a 2017 anti-corruption crackdown following alleged corruption claims has not served the company’s overall valuation.

According to Bloomberg in an October 2018 article: “ Alwaleed’s most valuable asset, a 95% stake in Kingdom Holding, has dropped 70% of its value since hitting a record high in 2014. The firm’s shares fell more than 20% following Alwaleed’s sudden detention in an anticorruption crackdown last November and have never fully recovered.”

During the same month, Kingdom Holding announced it was close to signing a $1 billion loan, its first borrowing since Prince Alwaleed was detained, Bloomberg reported. This will serve to fuel the company’s numerous investments.

A diverse portfolio

Kingdom Holding has a very diverse portfolio of local and international investments, with stakes in Citigroup, Twitter, Lyft, Careem, and Chinese e-commerce firm

Since his release, Prince Alwaleed has returned to dealmaking, with the acquisition of a 2.3 percent stake in Snap Inc, the parent of Snapchat, in a deal valued at $250 million, and a SR1 billion ($267 million) investment in Paris-based music streaming company Deezer, Reuters reported.

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