For a long time, Prince Alwaleed of Saudi Arabia has been a paradox that is quite incomprehensible to the outside world: on the one hand, he has no oil wealth and became the richest man in the Middle East through business and investment; on the other hand, he was born in the royal family, but he almost started from scratch.
Alwaleed is a frequent visitor to world news headlines. He has long been the richest man in the Middle East. In 1998, Forbes listed him as the second richest man in the world after Bill Gates. The legend of investing in Citibank made him called the "Arab Buffett" by the "New York Times". "The Economist" once wrote that among the grandchildren of the founding king of Saudi Arabia, Abdul Aziz, no one enjoys higher prestige than Alwaleed.
Alwaleed's high-profile luxury has attracted a lot of criticism, but in 2015 he donated all his personal wealth of US$32 billion to charity. After being arrested and released during the domestic turmoil in Saudi Arabia in 2017, he began to consciously put away his edge, making every move more confusing.
Alwaleed grew up in the traditional Arab civilization-the world is full of camels, tents and mosques, and there are Bedouins living in the nomadic deserts who live by water and grass. If you ask Alwaleed how to define himself, he will tell you that the first identity is "Muslim" or "Saudi". Alwaleed prayed five times a day. His private jet has a dedicated prayer room, and the computer-controlled cushions always face the direction of the holy city of Mecca, and this land is also the source of Alwaleed's wealth.
But at the same time, the Saudi prince is still fascinated by Western modern civilization-a free and open world, where entrepreneurs and bankers are constantly creating new wealth in a market that is chasing efficiency. In this completely different world, Alwaleed's Western dress and American education are no different from the top American investors. As the largest foreign individual investor in the United States, he holds shares in well-known companies such as Citibank, Four Seasons Hotel, News Corporation, Apple and Twitter.
The legend of Prince Alwaleed lies in the paradox of the "dual-core identity" between his royal family and the business elite.
As a member of the royal family, he is in the jungle of the third generation of the Saudi royal family, and is the same generation as the new generation of core figures in Saudi Arabia, Crown Prince Mohammed bin Salman ("Muhammad" for short); under the status of a business elite, Alwaleed, who is far from the position of succession, has become the richest prince in Saudi Arabia through his own efforts as early as the 1990s, and his business legend is even more prevalent in Western society.
According to the well-known sociologist and University of Chicago professor Ronald Burt’s structural hole theory, the position of an individual in the social network determines information, resources and power. If there is no direct connection between two social networks, and a third party can form a connection, then the latter will occupy a structural hole in the relationship network. Obviously, Alwaleed occupies a key structural hole in the two social networks of "Members of the Royal Family in the Middle East" and "Western Business Elites" (Figure 1).
"Prince on the Edge"
Saudi observers are outspoken about Alwaleed's future in the royal family. Simon Henderson, a Saudi royal expert at the Washington Institute for Near East Policy, said: “Alwaleed has no hope of becoming a king. His father, Prince Talal, has a history of criticizing the royal family in the past, and he 'S mother is not a Saudi."
Alwaleed's grandfather was King Abdul Aziz, the founding monarch of Saudi Arabia. The outside world generally believes that King Abdul Aziz had more than 30 half-parents. There are currently about 5,000 princes in the huge complex of the Saudi royal family, among which about 2,000 are in the inner circle. Prince Alwaleed belongs to the Talal family branch of the second generation of the Saudi royal family.
Alwaleed’s father, Prince Talal, is the 21st son of King Abdul Aziz. He was the Minister of Finance of Saudi Arabia and the Saudi ambassador to France; his mother was Lebanon’s first prime minister, Riad. ·Daughter of Soleh. Despite his strong political background, Alwaleed is considered impure royal blood. In addition, Prince Talal is a political "renovator" and actively advocated social change in the late 1950s and early 1960s. After the reform failed, Prince Talal, who had lived in Beirut, the capital of Lebanon, was expelled by the Saudi government in 1962 and went into exile in Egypt for two years. Since then, he and his son have never been able to inherit the Saudi throne.
Contrary to the Talal family, Alwaleed’s uncle and current King Salman bin Abdulaziz Al Saud ("Salman" for short) is Abdul Aziz The king's 25th son, who served as the province of Riyadh for more than half a century, turned the desert town into a prosperous city. After the death of his predecessor in 2015, the 79-year-old Salman became the new king and acted quickly, choosing the eldest son of his third wife, Muhammad, who was only 29 years old at the time, to enter the succession sequence and become the crown prince (Figure 2). Since taking office in 2016, Crown Prince Mohammed has immediately carried out drastic reforms. With the "2030 Vision" reform plan as a landmark event, he is actively seeking economic transformation and sustainable development in Saudi Arabia, affecting the political and economic patterns of the Middle East and the world.
In Saudi Arabia, a large number of royal family members occupy senior positions in the government, military and important social organizations, involving the country's internal affairs and diplomacy, as well as sports, culture, religion, etc., and they can receive monthly salaries since birth. The luxurious life of some royal family members is even more astounding. The British media once reported on the late King Fahd’s beloved youngest son: "He has 7 Cadillacs and 3 airplanes, and his weekly pocket money is US$6 million. The account has already set aside 1.6 billion U.S. dollars."
In contrast, Alwaleed's "impure" pedigree and his father's experience have created his marginal status in the royal family. What's even more difficult is that Alwaleed's parents divorced when he was a child. He settled in Lebanon with his mother when he was very young, and grew up with his younger siblings in different countries. At that time, Alwaleed rebelled and played truant. He recalled this experience and said, "That life changed me a lot."
In 1968, when Alwaleed was 13 years old, his father took him to the King Abdul Aziz Military Academy to study and became the youngest soldier in Saudi history. Then he went to the United States to study and studied business administration at Menlo College, where he received a bachelor's degree in two and a half years. Saudi militarization training and American business education have shaped Alwaleed's duality.
Birthplace of wealth
After the two oil crises in the 1970s, Saudi Arabia reaped a large amount of petrodollars in the international market, and domestic commercial activities became increasingly active. Saudi Arabia has set off a commercial frenzy like the California gold rush because of oil extraction. Alwaleed won the "first bucket of gold" in this feast.
In 1979, Alwaleed returned to China after graduating and founded an investment company in Saudi Arabia-an office with only 4 rooms and 7 employees. At the age of 25, he received $30,000 in start-up funding from his father and mortgaged a house donated by his father to obtain $400,000 in venture capital. The start-up funds were quickly spent, and he took another $300,000 loan from Citibank-interestingly, when Citibank was facing a crisis 10 years later, it was Alwaleed who turned the tide and invested $600 million in Citibank. Reverse the crisis. At the time of entrepreneurial crisis, his first wife sold a necklace worth $300,000 to raise money for the company.
Alwaleed's career turning point originated from trade agency and contracting business. At that time, commercial agents were one of the common sources of income for the Saudi royal family, and Alwaleed became a beneficiary of the contracting system. He once admitted in a media interview that the first pot of gold came from hundreds of millions of dollars in commissions paid by a company. According to the structural hole theory, the position of the individual in the network is more important than the strength of the relationship-even if Alwaleed's role in the royal family is not prominent, he is often regarded as an agent for foreign institutions to enter Saudi Arabia. "Commercial lubricant", and can skillfully use Western business knowledge to break through the limitations of royal identity. Alwaleed can usually get a commission of about 30% from the contract to provide services including "handling all government relations".
After earning his first pot of gold through a commercial agent, Alwaleed keenly grasped the trend of economic and social changes and quickly transformed his investment in real estate—this became his distinguishing feature from other royal members who are still obsessed with business relationships. Saudi Arabia’s petrodollars are attracting an increasing influx of foreign companies and individuals. Alwaleed foresaw that this would greatly stimulate the development of the real estate industry, so he began to purchase large amounts of land. During the Gulf War in the early 1990s, he took advantage of the lowest land price in Riyadh to buy a lot of land, and sold it three or four years later, with a return rate of 400%. Alwaleed, 35, became the largest private landowner in Riyadh.
According to The Economist's estimates, Alwaleed earned at least $1.5 billion through the sale of land in the mid-1980s to the early 1990s. In the 1980s, about 65% of its income came from real estate investment, and about 10%-15% came from transaction commissions. Regarding this experience, Alwaleed said, "Oil was a business that everyone grabbed at the time, but I didn't have that much capital at the time, and I could only start from other industries."
After laying the foundation for his business, Alwaleed founded the predecessor of Kingdom Holding Company in 1980 and changed its name to Kingdom Holding Company in 1995 and holds 95% of the shares.
Alwaleed, who is young and gold, is not satisfied with huge financial gains. In 1982, he chose to study in the United States again, looking for a new direction of development. He obtained a master's degree in social sciences from Syracuse University in just 11 months. The strong business atmosphere in the West inspired him to rethink his career, and he began to look for the most promising investment direction in the future.
Alwaleed believes that the best investment strategy is to move closer to the bank, because the bank is the "lighting lamp" of economic development. In 1986, the plummet of oil prices led to the closure of domestic companies in Saudi Arabia, and the Saudi banking industry, which was in its infancy, continued to explode with a large number of bad debts. In 1986, he became the largest shareholder of Saudi Union Commercial Bank with 7% of the shares and carried out a series of market-oriented reforms on it. Under his leadership, the stock price of this poorly managed bank has doubled by 20 times, and its return on assets has become the highest in Saudi Arabia. He then continued to invest US$335 million in the acquisition of Saudi Cairo Bank. In 1997, he merged with Saudi United Commercial Bank to create United Saudi Bank, which in turn merged with Saudi Bank of America, the largest bank in the Middle East at that time.
399 Park Avenue, New York, Citibank Headquarters. Alwaleed started from here and made his mark outside Saudi Arabia. At the end of 1990, following the large-scale bailout of Citibank, Alwaleed became an important investor in the US capital market.
Citibank is undoubtedly Alwaleed's most successful investment, but seizing this opportunity is by no means accidental. Alwaleed and his investment consultants began to purchase foreign bank shares in 1989 after studying the international market for two years. He first bought shares of four major banks that did not perform well, including Citibank, for $250 million, but eventually sold the other three and invested all the proceeds into Citibank.
At the time, Citibank was the worst-operated of these four banks. In the fall of 1990, the largest bank in the United States was facing a real estate loan loss and urgently needed to raise more than $1 billion in funds, but the plan ended in vain. Moody's has downgraded Citi's preferred stock to "junk", and many people have begun to suspect that Citi will go bankrupt.
At this critical juncture, Prince Alwaleed, who was almost unknown at the time, appeared. At the end of 1990, he spent US$207 million to purchase 4.9% of Citibank’s common stock (US$12.46 per share), and 5% was the maximum shareholding limit set by the Federal Reserve at that time for exemption from disclosure of information. In February 1991, Alwaleed spent another $590 million to purchase 10% of Citigroup's preferred stock. These preferred stocks have an annual dividend of up to 11%, and the conversion price is $16 per share. At that time, Alwaleed's Citibank shares totaled 14.9%, making him the largest individual shareholder of Citibank.
In these two transactions, Alwaleed invested US$800 million equivalent to half of his own net worth in a massive purchase of shares in Citibank. He firmly believes that Citibank has a strong brand and growth potential, and its value is seriously underestimated. His actions spurred other international investors, and Citibank soon issued more than $600 million in preferred stock. Citibank CEO Sandy Weir said Alwaleed "saved Citibank because he used huge sums of money to guide other investors."
Alwaleed’s debut in the international investment community was amazing. He also successfully ranked among the top ten richest people in the world at that time, earning the reputation of “Arab Buffett”. As a 35-year-old investment novice, Alwaleed's grasp of investment timing and courage shocked the world.
The Fed’s large investment in Citi has attracted the attention of the Federal Reserve. It requires Alwaleed to submit a formal application to approve its legal acquisition of 14.9% of Citi’s shares (investments in any U.S. bank’s 10% or more common stock must obtain the Federal Reserve’s Approved). Such applications are usually approved within 60 days, but 14 months after he submitted the application, the Fed still has no comment. Alwaleed eventually had to withdraw his application and dumped some of Citi's shares to reduce his shareholding ratio below 10%, but it was said that "this was the wisest choice at that stage." In fact, it was through a large-scale reduction in holdings that Alwaleed achieved geometric growth in his net wealth.
This huge bet quickly expanded during the two boom cycles on Wall Street. In 1994, Citibank's stock price soared. By 2005, the market value of Alwaleed’s holdings had soared from the initial US$800 million to US$10 billion.
In November 2007, before the global financial crisis was about to break out, Alwaleed still held 3.6% of Citibank. In the ensuing financial turmoil, Citibank became one of the worst financial institutions in the United States, with its stock price plummeting 98%. At the lowest point in January 2009, it once fell to $1, and Alwaleed's 217 million stock market value at that time was only about $600 million-a 94% drop from the peak. Alwaleed once again bucked the market and increased his holdings of Citibank, which aroused public concern. In January 2008, Alwaleed purchased an unknown number of Citigroup preferred stocks with a coupon rate of 7%. In November 2008, when the stock price rose to $6, he announced that he would spend another $350 million to purchase 1% of Citi’s common stock.
"This is a great opportunity. The time has come to buy." Alwaleed believes that Citigroup's universal banking model and global chain operations will make it a long-term winner in the financial industry. At the end of December 2009, because Citigroup stated that it would no longer pay dividends on preferred stocks, Alwaleed converted the preferred stocks into common stock at $3.25 per share. During the financial crisis, Alwaleed’s shareholding in Citigroup increased from 3.6% to approximately 5% (Figure 3). This adventurous investment legend is exactly the same as Buffett's investment philosophy of "greed when the market is fearful".
In the 1990s, Alwaleed's business empire expanded extremely fast, and its geographic scope far exceeded that of Saudi Arabia. His shares were mainly concentrated in the United States in the early days, involving industries such as hotels, real estate, technology, media, petrochemicals, and telecommunications. Royal family members generally do not like to show their faces and deliberately keep a low profile in business activities, mainly because they are worried that holding a large number of foreign company shares may have political impact. Alwaleed's business empire is operated by three entities.
The first entity is Kingdom Holdings, which is the core organization for Alwaleed's business operations. This international listed company has 8 subsidiaries, responsible for commercial investment in different regions and different industries.
The second entity is the Rotana Group (Rotana Group), with Alwaleed serving as chairman and holding 91% of the shares. Rotana is a leading diversified media group in the Middle East. It operates one of the largest TV networks in the Middle East. It also has the world's largest library of Arab movies and music, and more than 80% of Arab superstars.
The third entity is Alwaleed Private Office (Alwaleed Private Office), in charge of Alwaleed's personal wealth of about 16 billion US dollars.
According to the official website of Kingdom Holdings, in the past 5 years, the company's return on equity (ROE) in the technology industry and real estate industry have reached 31% and 25% respectively. As one of the most important indicators of Buffett's investment, ROE has been stable at more than 20% throughout the year is a very good financial performance.
According to the latest annual report, Kingdom Holdings' revenue in 2019 was 2.232 billion riyals (approximately RMB 4.04 billion) and net profit was 454 million riyals (approximately RMB 822 million). Sources of income include hotel and other operating income, dividend income and investment income, and directly holding companies are concentrated in the hotel and financial industries (Tables 1 and 2).
Al Walid took control of the luxury hotel chain management group-Four Seasons, the world's leading hotel operator-Accor, and rebuilt the legendary George V Hotel in Paris. Although Kingdom Holdings holds a large number of hotel shares and the hotel industry is also its main source of income, according to Muslim teachings, he insists on putting the income from tobacco, alcohol or gambling in these establishments in a separate fund and donating it to charities. Alwaleed’s “hotel complex” stems from the hotel industry’s compliance with its investment standards: it has an international brand, a mature marketing model, and a standardized management process.
Kingdom Holdings' most well-known investment in the hotel industry is undoubtedly the Four Seasons Hotel. In 1994, Isado Sharp, the founder of Four Seasons, was looking for financing. Through the introduction of Alwaleed's private banker, he met the prince who was considering acquiring the hotel chain. The Four Seasons Hotel meets his investment criteria for the hotel industry to “have a strong brand but not too large”, so the two parties met on the Alwaleed yacht docked in Cannes for negotiations. Taking into account Sharp’s concerns, he repeatedly assured that he would not cause brand confusion because he owns different categories of hotels at the same time. “This transaction is a long-term commitment for me” and defined the partnership between the two as “alliance”. ". Soon after, Alwaleed bought a 25% stake in Four Seasons Hotel at nearly twice the market price.
In just three years, the value of Alwaleed’s shares doubled from 120 million U.S. dollars to 250 million U.S. dollars, and by 2004 it exceeded 600 million U.S. dollars. Although most executives of Four Seasons Hotel believe that selling the company’s stock during the downturn is a serious oversight, Isado Sharp believes that Alwaleed is a "influential and visionary partner all over the world." Especially in the Middle East, where little is known.
Alwaleed’s idea of owning the Four Seasons Hotel has been around for a long time. He believes that privatizing a listed company can increase profits and at the same time transform the hotel in accordance with his own ideas. In 2008, he and Bill Gates co-led the privatization of the Four Seasons Hotel. After the transaction is completed, the Sharp family holds about 10% of the shares, and the remaining shares are equally divided by Kingdom Holdings and Bill Gates family office waterfall investment. Today, Alwaleed still holds 47.5% of the Four Seasons Hotel. The excellent quality of the Four Seasons Hotel has also brought many partners to Alwaleed. For example, Murdoch-the experience of Four Seasons Hotel George V in Paris has left a deep impact on him. He warmly entertained Alwaleed. And based on this decision to do business with Four Seasons Hotel. This hotel with a legendary history was rebuilt by Alwaleed at a cost of at least 1 million US dollars per room, and was named "Four Seasons".
During the Internet boom, Alwaleed went to Silicon Valley to invest. According to The Economist, he bought 6.23 million shares of Apple in March 1997 for US$115.4 million, holding 5%. At that time, Apple was in a state of loss and its stock price plummeted, but Alwaleed believed that Apple had great potential. Sure enough, its stock price had risen by 11 times during the eight years he held it. Unfortunately, he sold Apple stock too early. "Forbes" reported that Alwaleed sold most of Apple's stock in 2005. However, Apple's stock price began to soar since then. If he has been holding this 5% stake, its market value will exceed $114.5 billion as of January 2021. Obviously, compared with the success of investing in Citibank, the investment in Apple does not represent Alwaleed's best level.
In 1997, Alwaleed also purchased a 5% stake in Netscape for US$145 million. When AOL acquired Netscape, this part of the shares was valued at more than US$500 million. In 2011, Alwaleed set his sights on Twitter with great foresight. At that time, Twitter was about to go public. He believed that it would be a "promising, high-growth, and globally influential business", so he invested 300 million. The US dollar, holding more than 5% of its shares, once became its second largest shareholder. As of May 2017, the market value of Twitter held by Alwaleed and Kingdom Holdings was approximately US$1 billion.
According to P.J. Shuker, the head of the International Investment Department of Kingdom Holdings, 75% of the company's investments are international investments, but after 2000, more large investments were made in Saudi Arabia and the Middle East, and Emerging markets represented by China.
In Saudi Arabia, Kingdom Holdings' real estate projects include the Kingdom City project in Riyadh and the Jeddah Tower (also known as the "Kingdom Tower"). On a hot night in October 2007, Alwaleed, dressed in a brown Saudi dress and headdress, boarded his Boeing 747 at the Royal Air Terminal in Riyadh and headed to Jeddah to show his uncle King Abdullah so far. The planning model of Jeddah Tower, the most ambitious real estate project to date, will become the tallest building in the world once completed, with a height of 1,000 meters expected. Kingdom City is a 30-minute drive from Riyadh. It is a residential community covering 4140 acres and is estimated to cost US$6.6 billion. "It will become the center of Jeddah, a magnet." Alwaleed said proudly.
Alwaleed is very optimistic about China's development. In May 2006, Bank of China went public in Hong Kong, and he jointly invested US$2 billion with several investment companies to subscribe for a 2.7% stake in Bank of China. He said in an interview: “I made 4 calls within 10 minutes and raised 2 billion US dollars.” In the overseas listing of ICBC, he invested another 2 billion US dollars to subscribe. He also participated in the issuance of China Merchants Bank's H shares. In February 2013, Kingdom Holdings invested 1.5 billion riyals (approximately 2.5 billion yuan) to purchase more than 1% of JD.com's shares.
In March 1999, an article in the "New York Times" compared Alwaleed to "Arab Buffett." After seeing this, Alwaleed said he was very proud to be on the same level as a respectable investor. For this reason, he wrote a short note specifically to Buffy, and to his surprise he received a reply. Buffett wrote: "In Omaha, people call me the Alwaleed of America-this is a great compliment to me."
Alwaleed has maintained correspondence with Buffett for at least 9 years. In May 1999, after spending 12 days at the Plaza Hotel in New York, Buffett wrote to Alwaleed, saying that he used the hotel as his home when he was in New York and praised its extraordinary service. At that time, Alwaleed held 42% of the hotel and was in charge of hotel management. He replied that he was honored to be such a well-known person as Buffett to verify the service standards of the Plaza Hotel. He went straight to the subject and wrote, "I am very happy to consider participating in your future investment."
Alwaleed's investment industry and geographical distribution are relatively extensive, and its investment strategy can be summarized in four points (Figure 4).
(1) Buying "irreplaceable assets" at a low price
It is precisely because Alwaleed has successfully discovered undervalued listed companies several times, and boldly invested huge sums of money, that he has won the reputation of "Arab Buffett". He is keen to find investment opportunities in the West and acquire some companies that are "dead but still not out". Mike Jensen of Citibank summarized his investment strategy as the "right" investment target and the "very right" investment timing.
According to Tao Xun, the former investment director of Kingdom Holdings, these investments are usually realized through PIPE and subscription of corporate shares containing important real estate, and these two methods have relatively low risks in cross-border investment. In order to find the right time, he attaches great importance to research and analysis, and has sufficient patience in waiting for investment opportunities, even 7-10 years. He tends to find an entry point that can achieve 20% growth within 5-10 years.
Alwaleed said in an interview with The New York Times, "The industry I invest in should not be too cyclical, nor should it face a recession." He said: "I usually buy these companies after their stock prices have plummeted by 70%. As a long-term investment, I don't care about the old economy or the new economy. What I value is intrinsic value and growth potential. What I am looking for is in my own field. In fact, many of the companies he invests in are like this-Paris can no longer own another George V hotel, and New York can no longer own another Plaza hotel, including Citibank and News Corp. ——These are unique investment targets and golden opportunities.
(2) "3+3+1" investment standard
Alwaleed is a faithful believer in diversified investment. His banker Chuck Henry once revealed his main investment criteria-a preference for global industries and strong brands. Kingdom Holdings has a diverse portfolio: hotels, real estate, media, entertainment, finance and technology, and they are located in different countries. Kingdom Holdings not only invests in diversified global brands, but also focuses on leading market segments, such as mobile internet, digital technology and social media. He adopts the "3+3+1" standard for investment targets: 3 macro standards (own vision, strategy, and plan), 3 micro standards (be the first to take the initiative, take risks, and be ambitious) and 1 premise (business ethics) ).
(3) High value-added partners
Compared with pure financial investment, Alwaleed values strategic investment that can bring "high value-added partners". For example, in 1995, he cooperated with Guo Lingming, the second-generation head of Singapore's Hong Leong Group, to purchase from Trump the legendary hotel-Plaza Hotel (Plaza Hotel) located in the southeast corner of New York's Central Park, each holding 42% of the shares. . The prince believes that Guo Lingming is an excellent hotel management expert who can play important value for his long-term investment in the hotel industry in the future. Similarly, he and Bill Gates are not only close business partners, but also support and learn from each other in philanthropy.
(4) Transition from mergers and acquisitions to "helicopter management"
Alwaleed's early investment in the Middle East mainly adopted mergers and acquisitions integration, direct management and other methods. For example, in the 1980s when he invested in the Saudi Union Bank, which was in a quagmire, he first cleaned up the bank's various businesses and at the same time became the CEO to help it pay off debts, cut costs, and eventually turn losses into profits.
With the continuous expansion of investment layout, Alwaleed gradually abandoned the original investment management strategy, but increasingly tended to carry out macro-management, especially for investments outside the Middle East. He used the way of helicopter patrols to describe his investment management strategy-he was like flying a helicopter, flying over the vast forest, seeing the entire forest, and only landed when a problem was discovered. Find out the truth. He once said in an interview that he currently tends to own a minority stake and hopes that the board of directors and management will take responsibility for corporate governance separately. For example, for Four Seasons Hotel, Accor Group, etc., Alwaleed did not spend too much energy involved in specific operations and management.
The secret to the success of dual-core elites
Although his success is inseparable from his royal status, among the more than 5000 princes of the Saudi royal family, only Alwaleed has achieved unique commercial achievements and world-class influence by virtue of his personal talent and acquired efforts. His success factors can be summarized into the following aspects.
(1) Military execution and endurance
Tao Xun, the former head of the investment department of Kingdom Holdings, said, “Alwaleed observes a kind of military-style discipline. I hardly know anyone who can work and live like him for more than a few days. This kind of rigid daily discipline does not Not for a while, it has been the case for decades. Alwaleed is essentially a marathon runner. He runs hard and fast every day, and over time he has surpassed the crowd farther and farther."
Alwaleed worked more than 16 hours a day, reading to near dawn. Saleh Michel, a business partner of Arab Radio and Television, once said: “The Prince’s plans are well-organized at every step, and he particularly abides by the rules. This is a professional trait that the Arab world often lacks.” His schedule is very dense, 1997 More than 255,000 miles were flown during the peak annual investment period. His assistant even said that Alwaleed must make sure that every minute is counted, and his daily work is one quick and intensive meeting after another. There is no long talk about his work. Most of the time, he only needs to answer his continual questions and give the most straightforward answers and data. Every employee of Kingdom Holdings knows that if you put a report in his mailbox, you will find that it has been filled with comments the next morning when you get it back.
(2) Efficient information acquisition and processing capabilities
Outside of work, Alwaleed concentrates his energy on collecting information and following international news, so that he can have the latest understanding and insight into the world. His office downloads and prints the latest "New York Times", "Washington Post", "Wall Street Journal", etc. from the Internet every day. Alwaleed usually starts reading at two o'clock in the morning after finishing his work, and spends a few hours immersed in it. In the world of newspapers-this is earlier than most people in New York saw the newspaper.
Alwaleed set up a special information liaison officer position, his daily job is to wait by the phone at all times to keep in touch with the prince. The executives of Kingdom Holdings once lamented that it is hard to imagine that the prince could collect so much information in one day. When Alwaleed needs information, he can get it right away, whether it's day or night, and no matter where it is—possibly in his special plane, in a yacht, or even in his desert camp.
(3) Organize a young and capable team
Despite the growing scale of assets under management, Alwaleed still keeps the company's headcount extremely small. At present, the team of Kingdom Holdings has only more than 40 people, and there are only a dozen people who have direct contact with Alwaleed. Alwaleed believes that keeping a small team is a very good management measure, because it helps to focus the company's management on efficient operation processes, keep the focus on a few key investment projects, and coordinate. will be better.
The members of this "mini team" are very young, generally in their 30s and 40s, all have an American or British education, are energetic, have a high IQ, and are full of passion. In terms of team incentives, the company adopts an effective bonus system-employee salaries are not high, but stimulating bonuses are high, and it is not a year-end bonus but a quarterly bonus. The mobility of company personnel is very small, and some have even worked for more than 10 years.
(4) Being alone and thinking deeply
As a descendant of Bedouins, Alwaleed would go to the desert to rest every weekend without a business trip. His cooperation with Euro Disney was decided in the desert camp. His largest investment in Citibank also made up his mind after three days of "desert time."
"In my life, unless I come to the desert, I will not make major investment decisions. Here, my way of thinking will be very different." In this regard, the former chairman of Samsung Group Li Jianxi, " Zhang Xiaolong, the father of WeChat, also has similarities-they both accumulate energy, generate insights and influence the world in solitude and deep thinking.
The mystery of wealth
According to a former employee, Alwaleed used his ranking on the wealth list as a rigid indicator, and being in the top ten of Forbes’ global billionaires list is precisely his “primary goal” in his “gilded ambitions” ".
Since Alwaleed started his business around 1980, he has experienced two "exploitation in wealth". The first time was in the late 1980s, through the rapid accumulation of US$5.5 billion in Saudi commercial agents and real estate investment; the second time was the great success of investing in Citibank in the 1990s.
Alwaleed's extraordinary wealth growth quickly attracted media attention. In 1999, The Economist conducted an in-depth investigation of Alwaleed's wealth. At that time, he claimed that his personal wealth was 14.3 billion US dollars, of which about 11 billion US dollars outside Saudi Arabia, Saudi assets about 700 million US dollars, and huge amounts of cash and fixed assets. Stocks account for the highest proportion of its wealth composition, at approximately US$9.2 billion.
However, Alwaleed was not satisfied with his ranking. "Forbes" ranked 26th in the 2013 Global Rich List with a net worth of US$20 billion. He said that the magazine underestimated his net worth (should be US$29.6 billion) and sued Forbes for alleged defamation in the High Court of London ( Figure 5).
"Forbes" responded that they made estimates based on Alwaleed's net asset value, not based on Kingdom Holdings' stock price. Kingdom Holdings was listed on the Saudi Stock Exchange (Tadawul) in 2007. Alwaleed holds 95% of the shares and serves as the chairman of the board of directors. According to Saudi Arabia's regulations on minimum public shareholding, the public shareholding ratio of listed companies should be at least 30%, but after obtaining regulatory approval, a lower public shareholding ratio is allowed. The transparency and governance of the Saudi capital market are often criticized by the outside world.
Forbes’ concerns seem to be evidence-based. For example, Citi Holdings held by Kingdom Holdings is one of its main assets, but when Citi's share price plummeted, why did Kingdom Holdings' share price soar?
Affected by the global financial crisis, the share price of Kingdom Holdings plummeted by 60% from the beginning of 2008 to the beginning of 2009, which shrank Alwaleed's wealth by US$8 billion (Figure 6). However, since the beginning of 2010, its stock price has rebounded incredible, especially in the first ten weeks that Forbes determined that the rich list of the year rose 57%, which made his Forbes ranking rise to 19th ($19.4 billion). , While Citi’s stock price fell about 20% over the same period. The same thing happened in 2011 and 2012.
An early employee provided an explanation for the sharp rise in the stock price, "It's like a closed-field sport with not many players. They enter the market with large sums of money and buy each other's stock. Saudi Arabia has no casinos, and the stock market is like a casino." . A Saudi stock market analyst said, "If there are only a small number of free float shares like Kingdom Holdings, then it is extremely simple to manipulate the stock price."
Alwaleed's wealth is mainly composed of the following types of assets.
(1) Equity: Alwaleed and his children directly hold 95% of the shares of Kingdom Holdings (Alwaleed owns 94%, and the two children together own 1%), Rotana Group 91% of the shares, and approved These two entities hold shares in multiple companies.
(2) Physical assets: palaces, private jets, yachts, etc. It is estimated that his jewelry collection is worth more than 700 million US dollars.
(3) Cash: The Economist believes that if a company is experiencing a financing crisis, then he is one of the few private investors in the world who can easily write out hundreds of millions of dollars in checks.
(4) Royal allowance: As a member of the royal family, Alwaleed has a monthly allowance income of USD 15,000.
Alwaleed’s main residence, the Kingdom Palace, is located in the center of Riyadh, covering an area of 250,000 square feet. According to Time magazine, “In this sand-colored palace worth 130 million US dollars, 317 rooms are decorated with 1,500 tons of Italian marble, oriental silk carpets and gilded faucets, and the top floor is an airstrip. There are as many service personnel in the palace. 200, the chefs can provide food for 2,000 people within one hour." He owns a 120-acre resort on the outskirts of Riyadh, including 5 artificial lakes, a small zoo, a mini canyon and 5 houses.
The British "Daily Mail" reported that Alwaleed owns two private jets modified by Boeing 747 and Airbus 321 respectively. He is also the world's first private buyer of A380 passenger jets. This customized private jet has a total cost of at least 500 million U.S. dollars, has 800 seats, and was built into a luxurious "flying palace." The entire plane is the size of two standard tennis courts. Alwaleed’s air travel brought a lot of "commercial fruits". For example, the business negotiations with Guo Lingming about the Plaza Hotel were conducted on the plane—the other party could not "withdraw from the negotiating table" on the plane. Alwaleed urged his subordinates to pick out the core content from Guo Lingming until the plane landed at Riyadh Airport.
In 1991, Alwaleed bought the "Princess Trump" yacht for US$18 million and changed its name to the "Kingdom 5KR", which relieved Trump, who was in debt of US$90 million at the time. Like private jets, yachts are not only a means of transportation for the prince, but also an important place for business negotiations. Alwaleed and Isado Sharp’s negotiations on the Four Seasons Hotel took place on the yacht.
Promise without borders
Charity is deeply rooted in the spirit of Islam. Alwaleed once said, "Charity is a responsibility. I started this business more than 30 years ago. It is a fundamental part of my Islamic beliefs."
In 2015, Alwaleed announced that he would donate his entire worth of US$32 billion to the Alwaleed Charity Foundation to promote cultural exchanges, increase women's rights, and provide disaster relief. He stated that all the donated assets are his personal property, and are completely separate from the assets held by Wang Guo Holdings.
Alwaleed said that the inspiration for this move came from the Bill and Melinda Gates Foundation founded by the Gates couple in 1997. In 2010, Buffett and Gates jointly launched the Giving Pledge, advocating that people with a net worth of US$1 billion around the world donate at least half of their personal wealth before or after their deaths. Alwaleed is the first rich Arab man to participate in the pledge oath. After his arrest in 2017, Bill Gates sent out an e-mail of support, saying that "his commitment to charity is encouraging."
Over the past 40 years, Alwaleed has invested a total of US$4 billion in philanthropy, benefiting thousands of projects and more than 1 billion people in 189 countries. He has three independent charitable organizations: (1) Al Walid Global Charity Organization, responsible for charitable and humanitarian projects around the world; (2) Al Walid Lebanese Charity Organization, focusing on Lebanese social needs; (3) ) Al Walid Saudi Arabian charity organization, focusing on domestic needs in Saudi Arabia.
Alwaleed provides an average of US$100 million per year for infrastructure construction and poverty alleviation in Saudi Arabia, including building mosques, purchasing generators for remote villages, and building bridges. He said, "First, this is a religious responsibility; second, this is my social responsibility after I have wealth; third, this is my responsibility as a member of the royal family."
In 2020, the Avalid charity pledged to provide 30 million U.S. dollars to respond to the new crown epidemic. He also cooperated with Gates charity partners on projects to accelerate the development of treatment methods and provide diagnostic methods (Figure 7). Alwaleed said: "As many developed countries are struggling to deal with the new crown epidemic, we must consider the developing countries in Africa and the Middle East."
On most weekends, one or two thousand people outside the Prince’s desert tent came to ask for help. These Bedouin people who visited the door held the petition and pour out various requests to the prince sitting in the tent. The founder of Four Seasons Hotel Isado Sharp used to camp in the desert with Alwaleed. After witnessing this grand scene, he said, “The prince cherishes his property very much, but he believes that all of this is bestowed by God, so he must Return the money."
"Politics is flowing in the blood"
The Ritz-Carlton, located in the embassy district of the Saudi capital, Riyadh, is known as an "elegant oasis". It provides the most comfortable facilities for discerning guests in the urban desert, but this luxurious hotel once became a splendid "prison". In November 2017, a video circulated on social media, and the picture in just over ten seconds showed hundreds of Saudi royal family members and senior officials detained in this "five-star cell" in a conference room They smashed the floor collectively and were detained during the anti-corruption campaign launched by Prince Mohammed.
This move was described by the government as a fight against "rampant corruption," which set off stormy waves among Saudi political and business elites. On November 4, 2017, King Salman of Saudi Arabia announced a change in cabinet personnel and established an anti-corruption committee headed by the crown prince. Just a few hours after the establishment of the Anti-Corruption Commission, the crown prince announced the arrest of 11 princes, 4 ministers and dozens of former officials. They were all detained in the Ritz Carton Hotel. 350 people were questioned. Alwaleed became the first group. One of the royal family members whose freedom is restricted. A senior Saudi official said he was taken away in a desert camp and was charged with money laundering, bribery and extortion of officials.
In the first few days of Alwaleed’s detention, Kingdom Holdings’ stock price fell 23% and lost approximately $2.2 billion. On January 27, 2018, he was released after 83 days of detention. In an interview, he stated that he had reached a confidential understanding with the government.
Alwaleed once denied his interest in politics. It was not until 2003 that he made a statement of "working towards the political field" and admitted frankly that to give full play to his role as a social and economic reformer, he might become a "bridge" between the Middle East and the Western world. He said: "I am a member of the royal family, which means politics is flowing in my blood." What is daunting is perhaps his huge wealth and international influence-these financial capital may be transformed into political capital to ascend the throne.
Alwaleed has always been committed to promoting women's equal rights. Saudi Arabia expressly stipulates that women cannot drive transportation. However, in 2004, Alwaleed funded the training of Saudi Arabia's first female commercial flight pilot. He also repeatedly expressed his hope that his daughter can participate in the operation and management of Kingdom Holdings.
Alwaleed has had four marriages. The fourth wife, Amila, is known as "Saudi Diana". She is not from the royal family and is 28 years younger than Alwaleed. As one of the few Saudi women who have publicly "showed their faces", she broke the tradition, actively devoted herself to charity, and made public speeches. She publicly supported the rights of Saudi women to drive and work in the Western mainstream media, and thus became one of the most influential women in the Middle East. One.
Now, Alwaleed seems to have survived the storms of the end of 2017. His children have taken over their careers. His son Prince Kaleid has been managing the investment projects of Kingdom Holdings since the end of 2004. His daughter Princess Lim also joined the company after graduating from university and is responsible for the charity department.
The return of the paradox
World business leaders, especially business people in the United States, may wonder why a member of the Saudi royal family can enter the Western "business circle" so easily. But most people think this is in line with common sense. American CNN host Kang Ruisi spent more than a year tracking all aspects of Alwaleed's life. He concluded that Alwaleed’s fast-paced, highly organized lifestyle, and the dual personality shaped by the Middle East and the West made him unique.
However, it is clear that Alwaleed's royal identity and business identity are his winning "ace." As early as the 1990s, he began to set his sights on the broader international market, and successfully used wealth and royal lineage to weave a network of politicians and business tycoons from all over the world-in Western business elites and Saudi Arabia. The position of the "structural hole" between members of the royal family, and relying on the bond of trust, connects the two groups that were originally little related. How to find the position of one's own "structural hole" and stimulate efficiency through effective organization and development of social networks is worthy of in-depth consideration and reference for Chinese entrepreneurs.
Alwaleed did not shy away from the value of this network. He said that by getting acquainted with politicians and business people in the Middle East and the world, more investment opportunities and convenience can be brought. Sandy Weir, the former CEO of Citibank, said: "The prince has an incredible mind. He is very willing to exchange ideas with many people with different views in the world."
At the end of summer every year, Alwaleed’s "5-KR" yacht will leave the berth in southern France, head towards Cannes, and then stop at the opposite of the Ritz-Carlton Hotel, where he will accompany the Prince to conduct intensive business meetings. James Chandler, who is in charge of public relations at Kingdom Holdings, told the media that the prince’s schedule is very tight and he has to meet with politicians and business people from various countries almost every day. Former US President Clinton, George W. Bush, and former Italian Prime Minister Silvio Berlusconi are all his close friends.
In terms of wealth management, Alwaleed has set up a professional and clear management system. He adopts a two-tier governance structure for financial capital, including two family companies (international companies + local companies) and a family office, which are connected through the rules of family governance, corporate governance, equity governance, and wealth governance. Alwaleed’s philanthropy has effectively played the role of social capital through three organizations covering different regions.
Alwaleed's business style, political ambitions and luxurious lifestyle have also attracted countless malicious criticisms. Although he kept a low profile after being arrested in the Saudi storm, he is not a person who can stop.
Whether Prince Alwaleed, who is not among the heirs, will continue to participate in the Saudi version of "Game of Thrones" is yet to be known. Is it possible for a prince with Don Quixote-style adventurous spirit and the blessing of Wanguan assets to set off the next wave? No one knows what Alwaleed's next goal is. But we have reason to believe that his legend is far from over.