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BRIEFING BOOK
Data Information Knowledge WISDOM
PRINCE ALWALEED BIN TALAL
Location: Forbes, New York, New York
About Prince Alwaleed Bin Talal
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Debriefing Bin Talal
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Bin Talal in Forbes
"Apple Can't Save Saudi Billionaire, 07/21/09.. "A Week With
Prince Alwaleed," 03/27/09.. "I Just Can't Wait To Be King,"
03/11/09 "Royal Treatment Can't Save Citi," 11/20/08
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The Bin Talal Interview .. 17
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ABOUT PRINCE ALWALEED BIN TALAL Intelligent Investing with Steve
Forbes
Prince Alwaleed Bin Talal Bin Abdul Aziz Alsaud is chairman of
investment company, Kingdom Holding Company, which went public on
the Saudi stock exchange in 2007. He is the 22nd wealthiest person,
according to the 2009 Forbes World's Billionaires list.
Kingdom Holding contains his investments in companies such as
Citigroup and News Corp., as well as Four Seasons Hotels and
Fairmont Hotel management companies, among many others.
Alwaleed joined the Singapore government investment arm and
several other investors in a $12.5 billion capital injection for
Citigroup in January 2008; the size of his investment is
undisclosed. He is also an investor in mainstream technology
companies like Apple Computers, Motorola and AOL.
Though Alwaleed is a member of Saudi Arabias royal family, he
has mostly stayed away from joining in politics, preferring to pour
energy into his stock market and real estate ventures. He has been
outspoken about his disapproval over traditionalist political
moves, especially the treatment of women in Saudi Arabia. In 2004,
he hired the first female airline pilot in Saudi Arabia.
Alwaleed got his bachelors degree in business administration
from Menlo College and a master's degree in social science from
Syracuse University. He is currently married and has two
children.
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DEBRIEFING BIN TALAL Intelligent Investing with Steve Forbes
Interview conducted by Alexandra Zendrian January 11, 2010
Forbes: How has Kingdom Holdings been doing lately and how do
you anticipate it doing this year?
Prince Alwaleed Bin Talal: I think 2009 was a tough year, but
that's behind us. We are very optimistic about 2010 and thereafter.
We are seeing all our subsidiaries and our affiliates beginning to
seem more alive and seeing some growth.
What is fueling that growth? What gives you a reason to be more
optimistic about 2010?
Well, you know, I'm talking basically about the Middle East. The
Middle East, as you can understand, was not impacted as much as the
United States and other areas were impacted. Really, the impact
here was minimal. So we are beginning from a better point to begin
with.
And remember, the Gulf region is still very much oil based, and
the price of oil is around $80, so we have all these tailwinds
behind us.
In your personal holdings, you have some media companies. How do
you foresee those doing in the near future?
One of my biggest personal holdings is Rotana. That company has
a very dominant force in the Middle East. It has around 45% of all
the movie industry and around 75% of all the music. And this is
doing extremely well. It's growing around 14 to18% every year and
has top, top revenues.
What do you look for when you're making investments?
When we look at investments, we look at the company to see if it
has a global presence. We look at companies with an entry point
that can achieve 20% growth within a five to 10 year time horizon.
So, if you look at what's common among some of the companies I
have, including the Four Seasons, NewsCorp, George V, the Plaza,
these are all irreplaceable brands in their own fields.
Kingdom Holdings is also invested in Citigroup. How do you see
that doing this year?
Citigroup also is a blue chip name. Unfortunately, in the past
two years, it has faced tremendous difficulties; a lot of
headwinds. We hope that under the leadership of Mr.
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Vikram, and after paying the TARP, and after maybe taking some
losses that things will start to stabilize in 2010 and
thereafter.
I do strongly believe that the worst is over and it is behind
Citigroup.
Are you looking to invest in any other financial services
companies?
No, no. I mean, at this stage, we have Citigroup. We are always
on the move, always looking for opportunities, but at this stage, I
think our investments in Citigroup are fine with us. So I don't
think we'll invest more in that financial arena anymore.
What other arenas are you researching for possible
investments?
Now we are very much concentrating on where we have two major,
two huge projects in Saudi Arabia that between them, there are
going to be requiring investments of about $30 billion. And one of
those is in Jeddah, because it's a very fast formation city. The
city doesn't have any huge transformations. It has been that way
for the last three decades. So this is going to have major
transformations and this is going to have a highest rise tower in
the world, higher than one kilometer, and we are already in the
final stages of commencing the project.
In Riyadh, theres going to be a huge project that will house at
least 12,000 units with inhabitants of approximately 150,000
people. It's like a city within a city. So these are really going
to take quite a bit of our energy here. But you have to understand
that real estate has been hit all over the world, but in Saudi
Arabia it's very much different because demand is way, way beyond
supply. So it's an inverse of other countries whereby supply is
more than demand.
How is the real estate market overall doing in the Middle
East?
It depends, you know. Some countries, like Saudi Arabia, where
the population growth is very high, whereby you don't have the
mortgage low yet. Still the demand outstrips supply by much. Some
other countries, like Dubai, for example, whereby the supply has
overtaken demand by huge multiples, that's where the impact was
more dramatic. So really, we can't generalize and say all the
Middle East is uniform from the real estate point of view.
Would you look into purchasing more American real estate?
Well, we are a presence in the U.S., but maybe not directly
through our real estate in the ownership of hotels. For example, we
own the Plaza in New York. We own, for example, the Four Seasons
brand with Bill Gates. We own the Fairmont brand with the Colony
group, private equity. I own almost 100 hotels in North America.
Some of them are only in management, but some of them we have some
small stakes in them. So we are in the real estate arena in the
United States indirectly through our hotel portfolio.
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And obviously in Europe it's a bit different because we bought
Euro Disney in Paris. And we obviously have a lot of capital in
hotels in Europe also, like the Savoy in London, like Grand Hotel
in Monte Carlo, George V in Paris, Duburg, Geneva, et cetera. And
this is not only management but also ownership of real estate.
When you look for real estate investments, what are your metrics
for determining good and bad investments?
Obviously, real estate has been hit badly in the world. And
clearly now, it's cheap. But we're not just going to look for
cheap, we would like to get some value. And there are some things
of increasing value in what we buy.
When you're looking for companies to invest in, do you look at
their management?
Well, clearly, when we look into companies, there are several
factors. First of all, the entry value is very high, and then if
the company is experiencing some difficulties, either because of
cyclical events or competition or because of bad management. I
mean, sometimes some companies have bad management and when bad
management changes, the actual rate of change in the company. So
all these things interact together when you analyze the company and
before we decide whether to invest or not.
How are your charitable foundations doing?
As you know, we just established the charity foundation; it just
began. Actually, our charity began more than 30 years ago, but
right now we have officialized it by establishing the Alwaleed bin
Talal charity foundation. And it's been launched some six, seven
months ago and it is thoroughly covering Saudi Arabia and the globe
in many areas. For example, I am invested in some charities and
philanthropies in Africa, we are involved in more than 20 countries
through building schools, housing units, clinics, hospitals.
And obviously in the Middle East we are very much involved in
charity. For example, the Yemen catastrophe, we were the supporters
there. When the Tsunami hit the Southeast, we were the single
largest contributor by contributing huge amounts in Indonesia,
Bangladesh and Sri Lanka.
How do you determine what areas to do your charitable work
in?
We have a division that gets involved immediately in emergency
situations, on an urgent basis in catastrophes. But obviously we
have an ongoing support for many Saudis and in the housing and in
schools and hospitals.
You know, Saudi Arabia has a lot of poverty also. Regardless
about what you hear about the viceroy and people being rich, et
cetera. But there are other parts of Saudi Arabia and we are much
involved here, entrenched in supporting the Saudi community in
those areas. Obviously our support also goes to neighboring
countries such as Egypt, Lebanon, Syria, Palestine, North Africa,
et cetera.
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BIN TALAL IN FORBES Intelligent Investing with Steve Forbes
Faces In The News Apple Can't Save Saudi Billionaire Lionel
Laurent, 07.21.09, 07:45 AM EDT Tech success story can't stem
quarterly earnings decline at Prince al-Waleed's holding
company.
LONDON -- Apple's stock had a great second quarter, Steve Jobs'
poor health notwithstanding. Shares of the cash-rich iPod
manufacturer rose 36% between April and June, in line with rival
Microsoft but well ahead of International Business Machines and
Hewlett-Packard. But this may be of small comfort to Saudi
billionaire Prince al-Waleed bin Talal al-Saud, a 5% shareholder of
Apple, whose investment firm Kingdom Holdings announced on Tuesday
an 83% drop in second-quarter profits over the year.
The problem is that for all its recent gains, Apple's stock has
yet to recover losses suffered since 2008. As of June 30 of this
year, Apple was down 19% year-over-year. So while it's definitely
been a better performer than Prince al-Waleed's other stock
picks--step forward Citigroup, down 83%; Eastman Kodak, down 80%;
News Corp, down 33%--it may be a while before it helps annual
comparisons for the Saudi investor.
Perhaps Apple's quarterly earnings, due later on Tuesday, will
offer an extra boost. Analysts expect net income of $1.1 billion,
or $1.16 a share, compared with net income of $1.1 billion, or
$1.19, from a year ago. Sales are expected to rise to $8.2 billion,
from $7.5 billion. (See "Apple's Secret Weapon: Your Mom.") It's
not all tears for Prince al-Waleed, though. He cannily bought his
5% stake in Apple back in 1997, for $115 million, at a time when
the company was in trouble and facing down a takeover bid from
Oracle. At current prices, his stake is worth $6.8 billion, or 60
times the initial investment.
Kingdom Holdings announced second-quarter profits of 92.1
million Saudi riyals ($24.6 million) on Tuesday, down from 534.7
million riyals ($142.8 million) a year earlier. On a sequential
basis, however, the market rally did the company some good: profits
soared 83.4% between the first and second quarter.
Shares of Kingdom Holdings were down 3.1%, to 4.70 riyals
($1.25), on the Riyadh stock market. The stock is down 8.7% over
the past month and down 48% over the year.
Al-Waleed ranked 22 on Forbes' list of the world's billionaires
this year, down from number 19 last year. (See "I Just Can't Wait
To Be King.") Kingdom posted an $8 billion loss in 2008, and since
then the company has sold assets to help pay down debt.
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The World's Richest People A Week With Prince Alwaleed Kerry A.
Dolan, 03.27.09, 02:50 PM EST Inside the life of the Middle East's
richest man.
BURLINGAME, Calif.--It was an opportunity too rich to pass up.
Prince Alwaleed, one of the world's most successful investors and
the wealthiest man in the Middle East, had invited me to spend a
week with him in Saudi Arabia.
His objective: prove to Forbes that he is as wealthy as he
claims to be. For years, the prince had told us he was worth
several billion dollars more than the conservative estimates we
printed in our list of the World's Billionaires, and he wanted to
set the record straight.
The plan was for me to tour Alwaleed's vast real estate
holdings, including his lavish Riyadh palace, meet with various
executives of companies he owns, and gather other pertinent
information needed to calculate his net worth for Forbes' annual
World Billionaires list.
Last March, we estimated Alwaleed was worth $21 billion; he
claimed he was worth more than $25 billion. This year, amid the
massive decline of Citigroup, once his largest asset via his
publicly traded holding company Kingdom Holding, Alwaleed's net
worth had fallen, by our count, to $13.3 billion, making him the
22nd richest person on the 2009 list. Again, Alwaleed insisted he
was worth more, despite serious threats to his fortune looming on
the horizon. (See "I Just Can't Wait To Be King.") But observing
wealth on this scale, even for a seasoned billionaires reporter,
was staggering.
I arrived in Riyadh in early October. After two days, my head
was spinning. There was his impossibly large 420-room palace,
decked out in marble and decorated with large portraits and
photographs of Alwaleed, with two indoor pools and an indoor tennis
court. It took an hour and a half to tour the whole place.
Then there was the 120-acre "farm and resort" at the edge of the
city with its mini-Grand Canyon, mini-zoo, horse stables, five
artificial lakes and multiple residences. It was a refreshing bit
of green in an otherwise brown landscape. The prince evidently does
not worry about water bills; one afternoon the sprinklers at the
resort were going full tilt in the 90-degree weather.
Also on display: a fleet of 60 buff-and-green-colored cars and
motor homes designed just for use at the prince's desert retreat.
Another garage beneath the palace holds several dozen black
cars--Range Rovers, Suburbans, Volvo SUVs and other vehicles used
just for city driving. And then came the jewelry. Upstairs at
Alwaleed's palace in a wide marble hallway outside his bedroom, the
prince's petite palace manager had lined the floor with 50 wooden
boxes, each containing a lavish jewelry set fit for a king--or in
this case, a nephew of the king.
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The most spectacular set on display was a diamond and emerald
necklace with three emeralds the size of sparrow eggs dangling from
the center, with earrings and a ring to match. With a combined
total of 200 carats, the set is worth $40 million.
Most of the jewelry on display that evening was not to his
wife's liking, he said, adding that Princess Ameera prefers less
ostentatious sets. "It's too big for my wife," joked Alwaleed.
"Plus you'd need to wear a very low-cut dress to go with it."
Then why buy the jewelry? "It's an investment. I paid $50
million for jewelry worth $150 million," he said, referring just to
the swag by the bedroom. By Alwaleed's reckoning, his entire
jewelry collection is worth more than $700 million.
One night I joined him and Princess Ameera and their staff on a
flight to Cairo aboard his luxuriously outfitted Boeing 747. The
main seating area of the plane has been transformed into a living
room, with luxe couches along the plane walls, and behind it, a
dining room where we ate a light meal prepared by the kitchen at
the Four Seasons Hotel in Riyadh.
In Cairo, Alwaleed and his wife were among the honored guests at
a charity dinner hosted by Egypt's first lady. Queen Rania of
Jordan was there, and former U.K. Prime Minister Tony Blair was the
guest speaker. Throngs of TV cameras filmed the honored guests.
Two nights later, back in Riyadh, Alwaleed and his entourage
watched the recorded TV footage after dinner. It felt like the
royal version of watching home movies.
Princess Ameera, 24, is wife No. 4 for Alwaleed; they've been
married for four years. He's a one-wife-at-a-time guy, unlike some
other Saudi men who may have as many as four wives at once.
Ameera, an engaging and attractive young woman whose passion is
horseback riding, is studying for an undergraduate degree on a
special program Alwaleed has arranged with University of New Haven.
Professors from the U.S. teach Princess Ameera and several other
young women in classrooms located within the prince's palace.
Alwaleed has two children with his first wife (a distant
cousin); his son and a daughter are now in their 20s. His daughter
Reem's extravagant wedding a few years ago, held at the ballroom of
the Four Seasons Hotel Riyadh, was the talk of town. Transforming
the ballroom into the lush setting for the wedding apparently took
weeks; a clip of the scene, taken on a cellphone, even made it to
YouTube.
Alwaleed became a grandfather last summer when both his son and
his daughter each had their first child. One night while I was
there, his daughter Reem came to the palace after dinner with her
baby. The prince was clearly besotted with his adorable little
granddaughter, kissing her and bouncing her on his knee.
The prince leads a very disciplined life. Each night he stays up
until 4 a.m or 5 a.m., and sleeps for just four or five hours. The
office hours at Kingdom Holdings, his investment vehicle, run from
noon to 6
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p.m. Around 8 p.m., the prince has what he calls lunch but what
feels like dinner: a lavish buffet was set up outside in a
different location each night, either at the palace, the resort or,
on weekend nights (Wednesday and Thursday nights in Saudi Arabia)
at his desert retreat. He is practically addicted to text
messaging. His phone is always at hand, and while I was there he
sent text messages even while taking a bike ride and, out in the
desert, while he was driving a big Suburban. His other near
addiction: watching business news. During dinner each night, large
flat-screen TVs were turned most often to CNBC.
Business news has been grim since last fall, but Alwaleed hasn't
let it get him down. Stock of his Kingdom Holding fell 60% in the
12 months through mid-February, and has fallen another 19% in the
last month, to a recent $1.03 a share in mid-March.
But on the evening of March 11, when Forbes released the World's
Billionaires list, Alwaleed's office promptly issued a press
release trumpeting his success, despite his falling fortune.
"Prince Alwaleed ranked among the top 25 in 2009 Forbes
Billionaires list despite global economic challenges."
When you're as rich as Prince Alwaleed, losing more than $7
billion in one year doesn't feel that bad.
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Billionaires List I Just Can't Wait to Be King Kerry A. Dolan,
03.11.09, 06:00 PM EDT Forbes Magazine dated March 30, 2009
Saudi Prince Alwaleed is acting quite royal these days,
hobnobbing with world leaders and aiding the poor. But he has a
shrinking pot of money with which to buy public admiration.
On a hot evening last October Saudi Prince Alwaleed Bin Talal,
dressed in brown ceremonial Saudi robe and headdress, boarded his
Boeing 747 at the royal air terminal in Riyadh and headed west to
the fast-growing port city of Jeddah. A few hours later he
presented to his uncle, King Abdullah, a model of plans for his
most ambitious real estate project to date: Kingdom Tower Jeddah,
the world's tallest building, with an intended height exceeding
3,280 feet. Kingdom City Jeddah, a 1,750-acre residential and
commercial development, will surround the tower.
"It will be the epicenter of Jeddah. It will be a magnet,"
boasts Alwaleed. It will earn him a return of at least 20% a year
on his investment.
Well, that was the plan, anyway. With bank lending worldwide at
a near standstill, Alwaleed hasn't yet lined up the co-investors he
needs for his 40% piece of the $10 billion project (two Saudi
partners own the remaining 60%). The timetable for completing the
tower has slipped back two years, to 2016. Alwaleed remains
optimistic, sort of. "We will know in two to three months," he said
in mid-February.
It has been a humbling year for Alwaleed, the Western-educated,
liberal-minded prince known for his globe-spanning investments,
from Citigroup to hotels in Africa. Kingdom Holding, his
Saudi-listed investment vehicle, posted an $8 billion loss in 2008.
The stock's 60% fall over the past year erased $7.7 billion from
his fortune. That leaves him with a net worth of $13.3 billion,
putting him at No. 22 on FORBES' world billionaire ranking this
year, down from No. 19 last year.
Alwaleed, 54, has been making noises lately about eventually
becoming king, an idea dismissed roundly by Saudi watchers even
before the financial mess. Now he has bigger problems to deal with
than royal politicking. Alwaleed, once heralded as a savvy buyer of
solid stocks at bargain prices, has been forced since January to
sell off $1 billion of stocks, real estate and other assets--mostly
to meet debt obligations but also to free up cash for potential
investments.
Sales of stocks last fall resulted in a $4 billion loss (out of
Kingdom's total $8 billion loss). Alwaleed gingerly explains the
sales, saying they were made necessary by loan covenants with
banks. "We could have used cash, but we decided to sell some
assets," he insists.
The remaining $4 billion of Kingdom's loss came from marking
down to market value its stakes in Citigroup and 14 other Western
and Saudi companies, including News Corp. and the management
companies of the Four Seasons and Fairmont Raffles hotel chains.
"This is going to be a tough year,
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I'm telling you. Across the board, visibility is not strong,"
says Alwaleed. "We hope we can break even this year."
More asset sales are coming, in the neighborhood of $700
million, says Kingdom Holding Chief Financial Officer Shadi Sanbar.
"This is the year for deleveraging," he says. But not everything is
at a loss. In recent weeks Sanbar says Kingdom has sold chunks of
real estate outside Riyadh and in Jeddah and a stake in a hotel in
Geneva for an $85 million profit.
Even at its shrunken market value of $8 billion (at $1.27 a
share in mid-February), Kingdom appeared to be priced generously,
at roughly twice its probable liquidating value (given what has
happened to assets listed in the prospectus issued when Kingdom
went public in July 2007). In mid-February, with Citi's shares at
$3.49, Kingdom's slice of Citi was worth a mere $623 million, down
from its peak of $7.5 billion in 2000. Only 5% of Kingdom's shares
trade (Alwaleed owns 94% and together his two children own 1%).
Sanbar insists that this estimate of Kingdom's asset value is far
too low, given how the company has shifted its focus from listed
stocks to real estate in Saudi Arabia, hotels in the Middle East
and elsewhere, and possibly petrochemical investments. Four Seasons
has signed on 24 new hotels since mid-2007, and Fairmont Raffles
signed on 48 new hotels last year. "All those will add substantial
value to [Kingdom]," says Sanbar. But the fall in Citi stock has
surely taken some of the shine off Alwaleed's reputation. It was
his initial investment in Citicorp, as it was called in 1991, that
brought him international attention in the business world. He
stepped up to buy $590 million of Citicorp preferred shares, for a
split-adjusted $2.50 a share, at a time when Citi was under
pressure from regulators to increase its capital base and plagued
with difficulties in its real estate and developing-country
lending. Alwaleed saw an opportunity to make money on a solid
brand. For quite a while, he did, on paper.
As Citi's stock has declined, Alwaleed has been nothing but a
staunch supporter. In January 2008, when Citi shares had fallen by
35% from their peak to $27, he bought an undisclosed sum of
Citigroup preferred shares with a 7% coupon as part of a $12.5
billion round with the Kuwait Investment Authority, the Government
of Singapore Investment Corp. and others. In November, with the
stock at $6, he announced he would buy another 1%, or $350 million,
of Citi common shares.
Whoops. Late last month Citi called Alwaleed to say it would no
longer pay the coupon on the preferred shares. Like the U.S.
government, Alwaleed converted the preferred shares to common; for
every $3.25 of preferred par value he got one share, now worth
$1.02. Says Sanbar, "[Alwaleed] is definitely not planning to sell
Citi shares. We'll wait and see what happens."
The prince, who graduated from Menlo College in Atherton,
Calif., got his start with a modest house, a $30,000 gift and a
$300,000 loan from his father. He partnered first with Korean
construction firms and
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then others doing business in Saudi Arabia that needed a Saudi
partner, and reinvested every penny he made.
He added more Saudi companies and some well-known North American
outfits to his portfolio: Time Warner, Hewlett-Packard, Apple, News
Corp. and Motorola. The American public might know Alwaleed best
for the $10 million donation he attempted to make to New York City
after the 9/11 attacks. Mayor Rudy Giuliani returned the check to
the prince because of language in Alwaleed's press release that
Giuliani believed was critical of U.S. foreign policy. "The
Giuliani incident raised my stock in Saudi Arabia and the Arab
world," Alwaleed now says. "He's an expired hero. I'm still a
rising star."
In Saudi Arabia Alwaleed thinks he can sell lots of housing to
the country's youthful population--nearly 40% of the country's 28
million people are under 15. A law legitimizing mortgage debt
(allowing lenders to share in the downside and the upside, without
pure returns of interest, which are prohibited by the Koran) is
awaiting the king's ratification and should unleash demand. A
30-minute drive to the east of Riyadh, Kingdom Holding is building
Kingdom City, a residential community with hotels and a country
club, on 4,140 acres. Alwaleed estimates it will consume $6.6
billion and up to ten years in the building. Next door on 988
acres, he is spending $80 million to build Kingdom Oasis, a resort
with a safari park, horse stables, a racetrack and a "camel zone"
where the animals can wander freely.
His most quixotic venture is fueled by his apparent hankering to
become monarch. For the past 50 years succession to the throne in
Saudi Arabia has gone from brother to brother. Someday that
generation will pass on. The year after King Abdullah gained the
throne in 2005 he created an "allegiance council" with 35 members
who are either sons or grandsons of former King Abdulaziz, the
founder of modern Saudi Arabia. The council will pick the royal
family member to succeed 79-year-old Crown Prince Sultan, the
designated successor to 84-year-old King Abdullah.
Is there a possibility that Alwaleed might someday be king?
"Sure," he tells a visitor en route from Riyadh to Cairo last fall
to attend a dinner hosted by Egypt's first lady. A few days later,
when asked again during a videotaped interview, Alwaleed is more
coy. "The chain of command of people who could become king in this
country is between the sons and the grandsons of King Abdulaziz. I
am among them. I would do anything to help this country," he says.
Including being king? "Each one has a chance if it comes. I will
not seek it."
That, of course, is what all good politicians say. He and his
communications staff rarely miss an opportunity to raise his
profile at home and abroad. Each time Alwaleed meets with a head of
state or a prime minister (he's met with 209 over the past 36
years, but who's counting?) his staff puts out a press release,
often accompanied by a photo. He's a text buddy with French
President Nicolas Sarkozy and seven other presidents and prime
ministers.
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He's not above a little discreet bragging. "I'll tell you a
secret," he confides to a reporter. "I went to the king almost ten
years ago. He was crown prince then. I showed him pictures of
homeless people [in Saudi Arabia]." Abdullah formed a committee to
investigate, Alwaleed says, then visited a poor neighborhood. "The
day before that, if you talked about poverty in Saudi Arabia, you
were a traitor. The next day [after Abdullah's visit was made
public], if you didn't talk about poverty you were a traitor." The
photo on the back cover of the authorized biography Alwaleed:
Businessman, Billionaire, Prince, by Riz Khan, speaks volumes about
Alwaleed's view of himself. He stands in front of George W. Bush,
Jordan's King Abdullah, Saudi King Abdullah, Egyptian President
Hosni Mubarak and other Middle Eastern leaders. The photo was taken
at a 2003 meeting in Sharm el-Sheikh, Egypt. But in the original
photo Jordan's King Abdullah stood in front of the group of men,
not Alwaleed. "Yes, the photo was switched," admits Alwaleed when
asked about it.
Saudi watchers are blunt about Alwaleed's royal future. "He
doesn't stand a hope in hell of becoming king," says Simon
Henderson, an expert on Saudi succession at the Washington
Institute for Near East Policy, a think tank. "His father, Prince
Talal, has a past record of criticizing the royal family, and his
mother isn't Saudi." (Alwaleed's mother is Lebanese.) Says Rochdi
Younsi, director of Middle East research for the Eurasia Group:
"Alwaleed is the Donald Trump of Saudi Arabia. He may be a symbol
of success for some Saudis, but many others view him as being way
too gaudy." Wahabis, members of the religious establishment in
Saudi Arabia, generally oppose his notion of reform, says
Younsi.
Indeed, his open support of women sets Alwaleed apart from the
more conservative Saudi royals. Nearly 65% of the staff at his
palace and at Kingdom Holding are women. Inside his offices and his
palace, women do not wear the abaya, the long-sleeved black robe
and head scarf that women in Saudi Arabia are required to wear in
public. Many wear designer clothes and shoes they purchase with the
semiannual $10,000 clothing allowance Alwaleed provides.
"Some sheikhs are against me because I promote women," says
Alwaleed. "I hire many ladies. I hired the first [Saudi] woman
[airplane] pilot. But the king thinks it's fine. If the king told
me not to do it, I wouldn't." Later he adds, "How can you have a
country advance when 50% of the population is idle?"
The fall in his Kingdom Holding share price has put nary a dent
in Alwaleed's lifestyle. His palace, staffed by 124 people, has 420
rooms, two indoor tennis courts and several indoor swimming
pools--one surrounded by stuffed big game (including an elephant
and a zebra) that he and his grown children hunted in Africa and
Australia. What he calls his "farm and resort" on the edge of dusty
Riyadh is a riot of green lawns and palm trees. The resort has five
artificial lakes; a minizoo with zebras, giraffes, gazelles,
antelope, ostriches and camels; and five sumptuous residences.
Alwaleed has a meticulous system to give away money to
countrymen in need. He has promised to build 10,000 homes over ten
years for poor Saudis (so far he has built 1,200). Every Wednesday
night close to 1,000 men who have been vetted by his charity arm as
being in need of financial help make the trek to the prince's
desert retreat an hour from Riyadh to shake his hand or kiss his
right shoulder, and
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hand him their personal request for funds. (Alwaleed puts an
earbud in his ear during the hourlong process so he can listen to
CNBC.) On Thursday evenings he grants requests for funds to groups
of up to 100 women, and on Saturdays he grants funds to groups of
50 handicapped people.
He keeps a book that chronicles all his charitable activity.
"Some religious extremists say to me, 'You're an atheist.' I ain't
no atheist," says Alwaleed. His lists of his charity work are his
"insurance policy," he says. "I'm ten times better than [them]."
One night the prince goes with his caravan of black GMC Suburbans
to a poor neighborhood in Riyadh to hand out envelopes with the
equivalent of $800 in cash in each. He knocks on the door of one
very modest shack in which a carpet covers the dirt floor. He hands
an envelope to a woman in a burka who answers the door, then walks
into the house and opens the refrigerator. All that's inside: water
and eggs. "Can you believe this? It's horrible," he says to a
visitor in English. He repeats the same sequence several times.
Nights like these, Alwaleed may be winning fans, or not. But it
sure beats looking at his monthly statements.
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Market Scan Royal Treatment Can't Save Citi Miriam Marcus,
11.20.08, 02:10 PM EST Prince Alwaleed revealed plans to up his
stake in the bank, but shares still headed south.
Saudi Prince Alwaleed bin Talal plans to support Citigroup by
upping his stake in the bank, but news of the modest increase may
not be enough to revive weary investors' confidence.
Before the bell, Alwaleed, Citigroup's largest individual
investor, announced his plans to increase his stake to 5.0%.
Alwaleed said he believes the shares are "dramatically undervalued"
following a nearly 90.0% plunge since late 2006. Citigroup's market
value was $34.9 billion on Wednesday--the prince plans to invest at
least $349.0 million, based on Wednesday's closing price.
But the royal backing failed to distract investors from the
$20.3 billion in losses that the bank has racked up in the past
year due to the declining mortgage market and bad securities
investments. (See "Citigroup Regroups.") Citigroup's stock was down
14.22%, or 91 cents, to trade at $5.49, at midday in New York.
Shares of Citigroup have fallen 82.7% this year, and analysts
expect the bank's bottom-line losses to continue through 2009.
Citigroup was also hindered by Chief Executive Vikram Pandit's
announcement on Monday that 53,000 jobs would be cut by the end of
the first quarter of 2009. (See "Citi Carves Up Staff.") Investors
are worried that Pandit's plan to cut expenses, even with
Alwaleed's capital backing, won't be enough to revitalize
Citigroup. Pandit suffered a major setback last month when Wells
Fargo agreed to buy Wachovia , trumping Citigroup's bid to buy much
of the Charlotte, N.C.-based bank and add to its $418.8 billion of
deposits. (See "Time Out Called In Wachovia Fight.") "Spreads are
widening on pretty much everything," said Keith Davis, a bank
analyst at Farr, Miller & Washington. "Given that backdrop, how
much capital is Citi going to need to shore up its balance sheet? I
don't think anyone knows, and so the knee-jerk reaction is to sell
first and ask questions later." Citigroup, which has lost more than
half of its value in November, was the top decliner among large
U.S. banks, but the carnage was widespread. JPMorgan Chase was down
11.4%, or $3.25, to $25.22, and Bank of America was off 4.0%, or 52
cents, to $12.54, at midday.
In a year that's seen the rescue of insurer American
International Group and mortgage companies Freddie Mac and Fannie
Mae , some speculated about possible government intervention.
Prince Alwaleed, who currently holds less than a 4.0% stake in
Citi through his investment company Kingdom Holding, has been
buying shares of the New York-based bank, believing they are
undervalued and that it's been taking steps to improve its
operations amid the ongoing credit crisis. (See "Rebuilding Global
Markets.") Alwaleed added that he is "fully confident that
Citigroup's universal banking model and global franchise will make
it a long-term winner in the financial services industry."
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The prince initially invested in Citigroup's predecessor,
Citicorp, in 1991, coming to its rescue after the bank made some
losing bets on U.S. real estate and Latin America. The funding was
less than $600.0 million and has earned Alwaleed billions of
dollars.But the value of his holdings has fallen sharply over the
past year as Citi has been hit by the credit crisis--it raised some
$50.0 billion of capital from sovereign wealth funds and other
investors, including Alwaleed himself, to shore up its balance
sheet. Citigroup recently raised another $25.0 billion through the
U.S. government's bank bailout package.
The Associated Press and Reuters contributed to this
article.
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THE BIN TALAL INTERVIEW Intelligent Investing with Steve
Forbes
2010 Will Be Better
Steve Forbes: Your Highness, thank you very much for joining us.
You've indicated you're more optimistic about 2010 than last year.
What gives you cause for your optimism?
Prince Alwaleed Bin Talal: Well, I mean, you know, the world
went through a major economic recession. Thanks God, it was not a
depression. It was on the verge of being a depression the last two
years plus. But we are seeing in many of our businesses is that the
worst is over.
Although the economy's not picking up dramatically in the United
States and other regions in the world, but still, we are not seeing
things worsening. So, the fact that things aren't worsening, and
just beginning to slightly improve, just in itself, it gives an
indication that hopefully we're stabilizing.
Forbes: In the Middle East, in the Gulf States, other than
Dubai, have they held up fairly well during the downturn?
Bin Talal: Yeah, right, excluding Dubai, all the Gulf region has
really faired very well in this recession and downturn, really.
Because you know, the price, we're still a very much oil-based
countries, and the GCC, the Gulf Corporation Council countries, are
really very much oil-based still. And the price of oil around $80,
so really they have withstood the heat of the recession very, very
substantially.
Forbes: Eighty dollar oil makes life look a lot better.
Bin Talal: No doubt, yes.
Forbes: What is your bold prediction for 2010?
Bin Talal: Well, you know, it's difficult for me to predict, but
we always hope that the economic numbers in the United States, and
other parts of the world that will stabilize and, you know, be
above 50%. We're seeing the United States have some positive GDP
growth, but still unemployment is still stubbornly very high --
10%. And some people think that it's more than 10% if you add those
who stopped looking for employment. So it could be over 15, 16%. So
that's a very high number in the United States.
Forbes: You are very well informed about the United States.
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Bin Talal: I am. I'm fully invested here.
The Honeymoon's Over
Forbes: Do you, on Citigroup, what brought you in originally,
and where do you see it now?
Bin Talal: 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.
Bin Talal: 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."
Forbes: 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
Forbes: Real estate.
Bin Talal: 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.
Forbes: Are they going to have any major initiatives in 2010 or
is it going to be more trying to grow what they have?
Bin Talal: 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.
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Bin Talal: Well, I mean, at that time the one-stop shopping was
the model.
Forbes: Right.
Bin Talal: 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?
Bin Talal: 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?
Bin Talal: 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
Forbes: 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?
Bin Talal: 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.
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Forbes: 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.
Forbes: 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.
The Web Changes Things
Forbes: And what do you see happening with the Web, in terms of
the impact on media with everything from movies to news?
Bin Talal: Yeah, well, I mean, the Web has revolutionized
everything. I mean, it changes the whole equation and we are seeing
right now in News Corp. and some other companies would like to have
the Web pay for these, for content. And still, they have not found
the equilibrium point on what to do with it. Is it just, you have
to pay? How much? And to whom to pay?
So, this thing is an ongoing dialogue right now, but it's very
interesting what's going on.
Forbes: That's one way to describe it.
Bin Talal: Very interesting, yes, yes. And for example, you, as
Forbes, have the content. So, I mean, you're using the Web right
now very efficiently, also, and I follow that very thoroughly.
Euro Disney
Forbes: Thank you. Well we hope to continue to expand there.
What brought you to Euro Disney?
Bin Talal: Well, Euro Disney, I do have a good relationship and
an alliance with Disney for a long time by being an investor there.
And Disney is a very good product and it covers
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all of the European region. More than 13 million people go
there, so it's really very much a good attraction over there.
Forbes: It's really moving ahead now?
Bin Talal: Oh yes, now it's moving at full blast, 13 million
visitors last year.
Forbes: Are there other Disney projects you might get involved
in?
Bin Talal: No. Because you know, they have a presence in China
right now, and they got permission to go in Shanghai, and besides,
Hong Kong and Japan. No, I think, on those projects, they will do
it only with certain partners. We will be satisfied to be with them
in Euro Disney Paris.
Hotels Are Improving
Forbes: You obviously have very large holdings around the world
in real estate, including the United States. What do you see for
the U.S. market in real estate, particularly in hotels? You have
your pulse very closely on that.
Bin Talal: Oh, yes. We have many hotels. You know, I mean, we
have in New York, for example, The Plaza, which is a landmark here.
We are seeing the hotels coming back. They went down in 2008 and
'09, but in the beginning of 2010, and the end of 2009, we're
seeing the pick-up. Especially in New York in all our hotels.
It did not go pre 2007 crisis, but you are seeing a
stabilization, and a pick-up in Ref PAR, which is Revenue Per
Available Room.
Forbes: Some of them you manage, some of them you have equity
in.
Bin Talal: Yes.
Forbes: Quite a diversified portfolio. Do you plan to expand
because the prices are now more reasonable than a few years
ago?
Bin Talal: Our policy in the hotel business is that we own, as
you know, Four Seasons brand with Bill Gates. Each one of us owns
47.5%, and the rest is Mr. Issy Sharp, the founder. And we own the
Raffles and the Fairmont and it has under it a Swiss hotel we own,
the Movenpick brand. And some hotels we are invested in the real
estate and some of them we just manage. For example, The Plaza in
New York, we own 50% of it and we manage it. Some of the hotels we
don't own, but just manage it. So, all in all, we own 300 hotels in
the world between management, or partial ownership, or full
ownership.
Forbes: Are you going to be expanding that?
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Bin Talal: Well, we're always looking for opportunities. For
example, we have a fully fledged company, a publicly held company
in the Middle East that goes for assets, acquisition of assets in
the southern hemisphere. It's Latin America, Africa, Middle East,
and Asia. So, yes, it's time to buy now.
Saudi Arabian Real Estate
Forbes: It would seem to be a good time to buy. You have two
major projects going on in Saudi Arabia.
Bin Talal: Yes, yes.
Forbes: Huge.
Bin Talal: Yes, we have two major real estate projects. They're
transformational. One in Saudi Arabia -- one in Riyadh. It's around
12,000 villas it will be a city within a city with around 50,000
inhabitants with total investment around 25 billion riyals. We have
another project in Jeddah thats transformational also. We're going
to have the highest rise tower over there. And we're going to have
a lot of, you know, developments. Because they did not get any big
huge transformation development in real estate since the last two
decades. So it's the project that's been backed by the government,
and it's going to be a very unique project.
Forbes: On the projects, the financing is going to be there
now?
Bin Talal: Yes, the financing. Financing is going to come
through several parts. You know, equity, number one, obviously, and
the equity of the real estate. Number two, they're going to have
Islamic funding. We're going to have debt from banks and we're
going to have contracted financing. So we're going to have the
combination of five kinds of financing, not depending on one source
only.
Forbes: Now, in Saudi Arabia, has the mortgage law been changed
so that people can more easily buy housing now?
Bin Talal: You're very well informed. Unfortunately, the
mortgage law did not come in Saudi Arabia yet. It's now at the
final stage of being approved, has been discussed between the
Council of Ministers, and the Shoura, which is our parliament
equivalent. And we hope it's going to come imminently, and there's
going to be a big move for our research projects. We're betting on
that.
Forbes: Because you have, the population in Saudi Arabia is very
young.
Bin Talal: Yeah, exactly.
Forbes: What is it, 50% is below?
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Bin Talal: Seventy percent below 22, and the population growth
is around 3.4, 3.5%.
Forbes: That's one of the highest in the world.
Bin Talal: And Saudi Arabia is one of the rare countries whose
supply is way, way below demand. I mean, we need bigger supply to
really, to absorb all the demand. So demand is very high and supply
is still not much, because we're not having the mortgage law
yet.
Forbes: It's too bad Dubai couldn't send its real estate to
Saudi Arabia.
Bin Talal: What I would have done, I'd have moved all those
people working in their tower to Jeddah. We have sent all those
people, who were go, get the experience, knowledge, know how in
Dubai, and they would move to Jeddah to build our tower. That it
will be somehow a little bit taller than theirs.
Forbes: How much taller will it be?
Bin Talal: Well, it going to be a minimum 1,000 meters. Theirs
is around 828 meters.
Forbes: Do you have a projected date yet when this might be?
Bin Talal: Yes, it's going to be around 4 1/2 to five years.
Forbes: Wow.
Bin Talal: Yes.
Real Estate Funding
Forbes: And in terms of other real estate in, whether it's
Western Europe, London --
Bin Talal: Oh sure, in London we have Canary Wharf. You know, we
were the partners of Reichmann, you know, at 10 years ago when we
invested there with him. So, we have Canary Wharf, and obviously,
we have a lot of scattered hotels in Europe, such as, for example,
our hotel in Duburg and Geneva, and George V in Paris, Savoy in
London, the Grand Hotel in Monte Carlo. And we have, and these are
ownership, owned hotels, to a certain extent. But other hotels we
just manage. So we come into real estate through management of
hotels.
Forbes: And in terms of attracting, you've mentioned the two
projects that you feel the funding has been lined up for those. Do
you feel in real estate in the United States, not to mention London
or Western Europe, are the purse strings opening up again or is
still too early?
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- 24 -
Bin Talal: No, on real estate, it's still too early. Banks are
very hesitant to talk or even discuss nature of real estates. Yes,
it's very early. They're very worried and concerned about it.
Forbes: Did you get a sense, when you talked to Vikram and
others at Citigroup, that they're becoming more open to
lending?
Because while the president here says, "Lend," our auditors and
regulators go in and say, "Tighten up your lending standards,
increase your capital." Two opposite messages.
Bin Talal: Banks are very cautious, very conservative. You know,
it's like having a guy just leaving intensive care unit, ICU. He's
never going to run and jog. He's going to walk very slowly and then
walk a bit faster. So, no, no, they're not lending. They're very
conservative, regardless of what orders they get from
Washington.
Forbes: Now in looking at the Gulf states, other than Dubai, do
you feel that the young people are, especially in Saudi Arabia,
finding opportunities in the region? Or do you think more
development has to be done?
Bin Talal: Well, in Saudi Arabia we have a new plan to employ as
many Saudis as possible, and with Saudi men or Saudi ladies. And
with the growth that we have right now at around three or four
percent, so we're able to absorb some of those new graduates from
school and universities. But you have to understand in Saudi Arabia
you have an imbalance, whereby you have six million expatriates who
work in Saudi Arabia, yet to have two, three million
unemployed.
So a plan is needed totally to try to eliminate as much as
possible of those jobs that are being filled by expatriates and
have them filled by Saudi nationals, whether they be men or
ladies.
Forbes: And you've been a pioneer in employing ladies, employing
women.
Bin Talal: Yes.
Forbes: Are others following your good example?
Bin Talal: You know, we have taken a decision almost five years
ago to really employ ladies. And I tell these ladies, "I'm not
employing you for your own sake. I'm employing you for the sake of
Saudi Arabia and then for your own sake." Because when Bill Gates
came to Saudi Arabia, and he came publicly and said, "Any country
that does not employ around 50 percent of its population," which he
means is referring to ladies here, "cannot really advance and have
a good cause in economic development." And I told him, "Thanks a
lot for saying that." I believe that right now we are the vanguard
there, and many companies right now are beginning to hire Saudi
ladies, and beginning to incorporate them and assimilate them in
the system, economically, and even in the political arena. Like,
for
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example, some ministers are beginning to hire some ladies, also.
We're pushing very hard for that.
Finding The Next Apple
Forbes: Good, good. You're obviously a major global factor, as
you've mentioned in the media, in real estate, financial services.
Are there other areas you're looking at to make a major push in the
next few years?
Bin Talal: Well, yes, I mean, look, we are financial investors.
I mean, besides real estate domestically and internationally,
hotels, regionally and internationally, real estate, hotels, we are
invested also in technology, for example, in Apple computer. We are
in media also.
Forbes: You made a very good investment there. Tell us, in 1997,
you made an investment. What was the equivalent per share?
Bin Talal: We entered at around $9.50.
Forbes: And it's now over $200?
Bin Talal: Yes, yes, yes. That was a home-run investment, no
doubt. Steve Jobs is a genius, and at that time, you know, Apple
was down, but was not out, and history proved that.
Forbes: Do you have any other Apple-like recommendations?
Bin Talal: Well, I mean, it's a bit too late to get in Apple
right now, because really.
Forbes: But what's the next Apple?
Bin Talal: Well, we're looking. I mean, we don't see anything
right now, really, that's really very lucrative, frankly speaking.
But I'll call you, for sure. And you call me if you have some good
deals, also.
Forbes: Good, well, we'll make sure our viewers see it as
well.
Bin Talal: Sure.
Forbes: Your Royal Highness, thank you very much.
Bin Talal: Always a pleasure to see you, Steve, a good
friend.
Forbes: Good to see you.
Bin Talal: Thanks a lot.
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Forbes: Thank you.