In what is seen as a major boost to the Saudi stock market and the real estate sector, Prince Alwaleed bin Talal, chairman of Kingdom Holding Company, announced here yesterday that he would invest more than SR10 billion in those two sectors as part of a strategic move to diversify his investment portfolios. Of the total amount, SR5 billion will be invested in local companies, including the Saudi Research and Marketing Group (SRMG) from the media sector. Banking, industrial and consumer goods manufacturing sectors will be the other beneficiaries of Prince Alwaleed’s investment portfolios. The shares of companies represented in these sectors are traded on the Saudi stock market.

Addressing a press conference, Prince Alwaleed said the remaining SR5 billion would be channeled into real estate projects in Riyadh and Jeddah. KHC’s decision to invest more than SR10 billion in the Saudi stock market and real estate, he pointed out, reflects its confidence in the local market. “We made a promise in the light of our government’s prudent economic policies which will reflect on the Saudi stock market and now we have fulfilled our promise,” Prince Alwaleed said.

Giving a sectoral breakdown of his investment portfolios, the KHC chairman said that of the SR5 billion earmarked for the Saudi stock market, his stake in Samba Financial Group will increase to more than five percent. As for the industrial sector, his investment will be divided between the fields of industry and consumer goods through the National Industrialization Company (Tasnee), raising Prince Alwaleed’s stake in that company to more than ten percent.

The consumer goods sector, through Savola, will draw in more than 13 percent of his stake. As for the media sector, the KHC chairman said he would invest more than SR2.1 billion in a strategic move by acquiring over 25 percent share of the SRMG. SRMG is the holding company for Saudi Research & Publishing Co. whose publications include Asharq Al Awsat, Arab News, Al Eqtisadiah, Hia magazine, Al Majalla magazine, Arrajol, Sayidati, Arriyadiah, etc. Other subsidiaries of the SRMG are Al Khaleejiah Advertising & Public Relations Co., Saudi Distribution Co., Al Medina Printing Press, Saudi Specialized Publishing Co., etc. Prince Alwaleed disclosed that he would acquire stakes in Medgulf of the insurance sector.

As for the SR5 billion to be invested in the real estate sector, the first is the Riyadh project to be launched in the first quarter of this year. “Both the Riyadh and Jeddah projects will be the biggest ever real estate projects to be launched and will constitute a significant part of the local real estate market.” He pointed out that land for Riyadh and Jeddah projects has already been acquired by KHC, which will set up real estate companies to be traded on the Saudi stock market. The Riyadh project will be located on a 16.5 million sq.m. site on the Dammam highway, a 15-minute drive from the city center. The project will include a leisure resort and facilities managed by Fairmont Hotels and Resorts with an area of one million sq.m. It will cost SR25 billion when completed. Prince Alwaleed said the residential areas will consist of 13,500 units to accommodate 69,000 residents (8.4 million sq.meters) and will include serviced villas to be managed by one of the hotels. Commercial and retail facilities will be located close to the residential complex over an area of one million sq.m and another retail center with an area of 300,000 sq. meters. He said the Jeddah project would be spread over an area of 5.3 million sq.m in the city’s northern area on the Red Sea coastline. It will cost SR50 billion when completed. It will be a landmark project featuring a colossal skyscraper surrounded by other facilities, such as residential and commercial complexes and the construction of a five-star hotel and offices. The residential area will be 1.5 million sq m and include schools (150,000 sq.m), offices (800,000 sq.m), while the remaining site will be utilized for recreation facilities, tourism and the construction of four-star hotels.

The KHC chairman announced that plans are under way for the development of a diplomatic quarter on the Jeddah land. The site plans for the land were developed by HOK, a Canadian company. The project will connect the Red Sea coastline of the area to Sharm Obhur, which is known for its natural beauty.

Motasher Al-Morshed, financial consultant, said Prince Alwaleed has made strategic investment decisions, since all the four sectors (banking, industrial, consumer goods and media sectors) represent growth areas. He has made a smart move with his decision to invest SR5 billion in the four sectors of the stock market at the right time. The SRMG has been doing very well with its future growth prospects looking good. All the companies that will form part of his new investment portfolio have healthy balance sheets, he added. SRMG announced earlier last week that its net profits for 2006 were over SR260 million.

Speaking about Saudi bourse, Prince Alwaleed said the Capital Market Authority should take stronger measures to stop companies that enlist their shares for public offering if they are proven shaky and its losses affected its own capital. “We welcome CMA’s move to stop two companies.” He said he was hopeful that the current situation would be rectified in the Saudi market, stressing at the same time that the Saudi economy was strong and diversified. “Our investments, God willing, will return trust to the Saudi stock market,” the prince stressed. “We invested in SRMG because we believe it has a promising future.”

Alwaleed denied that he had withdrawn money from his portfolio from the shares of his companies in the Saudi stock market which lead to the crash in 2006. “I want to say it bluntly: I had not withdrawn a single riyal from our portfolio in Saudi Arabia last year,” he said. “Kingdom Holding Company was never a broker in the Saudi stock market.” The prince said that plans are being set with Saudi authorities to finalize the offering of some of KHC’s shares for public offering in the near future, without giving a specific date. The prince said that currently the Saudi stock market was seeking “a new bottom”, saying that he did not wish to see it return to its situation in 2006 where its roof was 20,000 points.

He said it was not the duty of the government of Saudi Arabia to directly interfere with what happens in the stock market, citing the example of the crash of the NASDAQ stock index in the US years ago and the non-interference of the US federal government. Alwaleed said that he had given authorities in the CMA three proposals to improve the situation in the Saudi stock market. The first is to allow companies to buy their shares in the market. The second is to allow non-Saudi companies and nationals to enter the stock market. The third is the need for more transparency in the market, where every company would be obliged to fulfill its expectations for its quarter or yearly results. “It is not acceptable that a company announces that it expects profits worth SR100 million and then it only generates SR10 million,” he said. “The company should be held responsible before CMA,” he pointed out.

Kingdom Holding Company also confirmed yesterday that it would be bidding for a license to operate Saudi Arabia’s third mobile network as well as its second landline. “We are working with a Turkish company (TURKCELL) on to offer a bid for the license of Saudi Arabia’s third mobile network,” said Talal Al-Maiman, executive director for domestic affairs and development.

Source: www.arabnews.com

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