Saudi Arabia’s “Look East” policy is mirrored in the business activities of Prince Alwaleed Bin Talal whose Riyadh-based Kingdom Holding Company has headed the Top 100 list for the last four years. This year, however, it is No. 3 because of changes in the company’s investments. The prince spoke to Top 100 Supplement Editor Michel Cousins about his investments in the Far East.
Although his Kingdom Holding Company (KHC) has investments in as wide a range of industry as could be imagined, a few sectors stand out — notably hotel, banking and the media. It is in hotel ownership that Prince Alwaleed has become actively involved as a direct investor through his Dubai-listed Kingdom Hotel Investments company (KHI). KHC, chaired by Prince Alwaleed, has also formidable stakes in the Four Seasons and Fairmont/Raffles chains of hotels.
When it comes to hotels, Prince Alwaleed is a canny investor. He can see where the market is heading and where the rewards will be — and he clearly sees Asia and the Far East in particular as a growth area. Returns from Asia are “very good”, he told Arab News earlier this month. But two years ago, the Far East did not figure in KHI’s portfolio. It is very different today. According to KHI, a third of its total investment is in the Far East.
The prince is always on the lookout for new opportunities as well as wanting to see how existing investments are being looked after. Since the spring, he has been on a number of visits to countries in the Far East, exploring investment opportunities both for KHC and KHI, signing new contracts, checking on existing businesses and making some charitable donations. In March and April, he was in Indonesia, Singapore, Malaysia, the Philippines and China, including Hong Kong and Macau. At the end of May, there was a brief visit to Cambodia, Vietnam and Taiwan. In August, he visited Papua New Guinea, Japan and Mongolia.
“There is no doubt about it,” the prince said. “Asia is a prime focus for our business. It is experiencing a major boom. I want to explore opportunities in almost all Far Eastern countries. We are doing a lot in Asia, whether directly (largely through KHI) or indirectly (through KHC). I met top leaders in all countries and the business communities and we executed several projects. We have direct and indirect investments and projects. We have 20 Four Seasons Hotels in the Far East, five Raffles hotels, five Swissotels — and things are expanding.”
As far as the hotel business goes, China has to be seen as the star because of its growth. In China, Hong Kong and Macau, more than a dozen hotels owned directly or indirectly by KHI or KHC are open or under construction — to be ready for the 2008 Beijing Olympics. These include: One Raffles, a Swissotel and a Four Seasons hotel in Beijing; two Four Seasons hotels in Shanghai; one each in Hangzhou and Guanzhou; a Raffles in Tanjin; a Swissotel in Shanghai; one each in Foshan and Kunshan; a Four Seasons and a Fairmont/Raffles in Macau and a Four Seasons in Hong Kong.
But the two companies’ burgeoning presence elsewhere in the Far East is just as impressive. In Cambodia, there are two hotels (arguably, the best in the country) — the art deco Raffles Royal Hotel in Phnom Penh and the equally luxurious 1930s Raffles Grand Hotel at Angkor Wat. In Taiwan, there is the Four Seasons Grand Formosa in Taipei. In Thailand, the Karon Beach resort at Phuket was bought in 2006 and rebranded as a Movenpick resort while there are Four Seasons hotels in Bangkok, Chiang Mai, Koh Samui and the Golden Triangle, plus two Swissotels in the capital. In Singapore is of course the original Raffles, plus the Raffles Plaza, two Four Seasons hotels and two Swissotels. There are two Four Seasons hotels in Bali, one in Jakarta and two in Tokyo, where there is also a Swissotel. In Malaysia, there are three hotels, including a Four Seasons Kuala Lumpur. These obviously represent an immense investment by both KHC and KHI.
A substantial number of the properties have been obtained this year. Four Seasons bought the Taiwan Grand in early spring. Traders Hotel Kunshan, the only approved five-star hotel in Kunshan City, was bought by KHI shortly afterward for $600 million and rebranded as Swissotel Kunshan. Also in the spring when in Malaysia, Prince Alwaleed signed the $114 million deal by which KHI acquired the Four Seasons hotel at Langkawi, recently nominated the No. 1 resort in the world. The plan is to spend a further $35 million to enlarge the resort by adding more villas and luxury suites.
Raffles resorts are under construction in Da Nang in Vietnam (opening in 2010), Phang Na near Phuket in Thailand (2009), the Maldives (2008), Bali (2009) and Manila (2011). “It is a huge project,” the prince enthused, “two hotels and residences in the heart of the commercial district.”
Other projects are in the pipeline. “We are discussing more hotels in China,” the prince revealed. “We went to the Far East to look at all opportunities, not only hotels. For sure, we are going to invest in Vietnam. We’ll have two hotels there. It is not decided yet whether they will be Fairmont or Swissotels — but they will not be Four Seasons.”
The prince went on to say, “Another major hotel is being discussed now in Thailand.” As for India: “We are looking at many opportunities there and in Pakistan — in hotels and in infrastructure.” A Four Seasons recently opened in Mumbai’s commercial Worli district. There is also a Four Seasons hotel in Goa.
The Far East is not only about hotels for Prince Alwaleed. “In Hong Kong, we have Disney and in Tokyo we also have Disney.” In part, his trips to the Far East were also to see how KHC’s Citigroup investment is faring in the region, particularly in China since the prince is the largest single investor in the banking group. “We are also Citigroup. It is throughout the Far East. In China, it has assets of around $8 billion and 4,000 employees. It has bought stakes in the Pudong and Guondong banks there. So it is very big in China.”
The opportunities offered by banking in China are clearly of interest to the prince. Earlier this year, he, along with a group of Saudi businessmen, hoped to take a $2 billion stake in the bank. In the event they were allocated much less. “We got $380 million,” he said.
Asked whether he planned to try again to invest in other banks in the Far East, the answer is a firm “no”. He clarified, “That will be done indirectly. Citi is all over the Far East.”
What about investments in media and communications in the Far East? Along with hotels and banking, they are, after all, another pillar of KHC’s operations. “Yes,” the prince said. There will be investment. But again, indirect. As you know, we are in alliance with Rupert Murdoch’s Newscorp. Together we have Star (the satellite television network). It broadcasts to India, China and countries in the Far East. So yes. But it will be indirect investment. The costs of doing it alone are very high.”
The answer shows that even for one of the richest men in the world, investment is as much about having funds in place as finding the right opportunities. Earlier this month, Kingdom Hotel Investments said it would raise $500 million in project finance to help pay off debt and free up cash for acquisitions. A fortnight ago, just days after it announced the sale of the 219-room Four Seasons Hotel in London for SR550 million, KHC announced the sale of the Swissotel in Sydney for SR281 million ($75 million). But although the Four Seasons chain is arguably the world’s premier hotel chain, the prince’s business is not hotels. His business is business. Selling is as important as buying and knowing when to sell as much a skill as knowing when to buy. That said, while he may happily buy and sell newly-built hotels and resorts in China or anywhere in the world, it is nonetheless difficult to see him parting with a hotel as iconic as the original Raffles in Singapore or the Royal in Phnom Penh, any more than he would willingly part with London’s Savoy or New York’s Plaza.
Owning the world’s best hotels is clearly a love affair for the prince. It would be surprising, indeed, if in the next few years, other famous hotels do not appear in his portfolio.
Major Donor
Just as Saudi Arabia is a major donor of aid to Asia, so too is Prince Alwaleed Bin Talal. This year, among various other donations, he has given $1 million to the International Islamic University of Malaysia, $360,000 to the SOS Children’s Village in Indonesia, funded 31 scholarships for Cambodian Muslim students and made a substantial donation through the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) for victims of the floods in Indonesia which left tens of thousands homeless.
Kingdom Foundation channels and coordinates his aid. While informally linked to his Kingdom Holding Company, it is a separate entity and has, as one of its aims, the provision of “effective, rapid and focused” aid in times of natural disasters. The prince was a major donor to the 2003 Iran earthquake relief operations and the largest single donor to the 2004 tsunami disaster, providing donations worth a total of $20 million for the latter.
The 2005 Pakistan earthquake again saw the prince helping out with an immediate response of tents, blankets and medical supplies. Soon after, he went himself to the affected area accompanied by the Pakistani prime minister. His trip resulted in an additional $1 million on top of the $7.5 million already given. Since then, he has built 20 schools in the area.
Not only is the prince quick to respond to natural disasters but also to man-made ones. He has been a major funder of reconstruction in Afghanistan, providing over $10 million in aid.
There has also been aid to projects in India (including funding for housing in Delhi in cooperation with the Arpana charity of Britain’s Prince Charles), help for flooding in Bangladesh and earlier this year, during his brief visit to Mongolia, he gave $100,000 for humanitarian projects. “It is not just big donations that help,” Prince Alwaleed said.
Apart from dealing with disasters, there are four other important objectives to the prince’s giving — whether in Asia or anywhere else — helping alleviate poverty, particularly in the Muslim world; the empowerment of women, particularly in the Muslim world; the education and empowerment of young Muslims in order to improve the state of the Muslim world; and support for inter-faith dialogue. The latter has resulted in the prince helping fund C-110, the World Economic Forum’s West-Islamic dialogue body.