Prince hopes to add China to Kingdom

Prince Alwaleed bin Talal's Kingdom Holding has made a US$2 billion bid for a stake in Bank of China. Picture / Reuters

RIYADH - A Saudi consortium led by Prince Alwaleed bin Talal launched a US$2 billion ($3.22 billion) bid yesterday for a stake in Bank of China, which has just completed the world's sixth-largest initial public offering.

The billionaire prince, chairman of Kingdom Holding, and his partners wanted to buy 2.7 per cent of China's second-biggest lender, a Kingdom Holding statement said.

The statement gave few details of the deal except to say that it was a sign of the growing commercial ties between Saudi Arabia, the world's top oil exporter, and China, the world's fastest growing major economy.

"Prince Alwaleed is interested in buying a stake worth US$2 billion in the Bank of China. We cannot give further comment because book-building is in process," said Ahmed Halawani, chief executive of Alazizia Commercial Investment, the deal's arranger.

Prince Alwaleed, ranked by Forbes as the world's fifth-richest person, linked the bid to King Abdullah's drive to develop ties with Beijing. The Saudi king visited China in January, and China's president came to Riyadh last month.

"We are pleased with this historical offer in line with King Abdullah's initiative and hope it is one of many to come," the statement quoted Prince Alwaleed, the king's nephew, as saying.

Ties between the two countries are built on China's drive to secure energy supplies and a Saudi desire to diversify an economy that relies overwhelmingly on oil exports.

With oil prices soaring, Gulf Arabs are increasingly looking east to invest, lured by rapid growth rates and the knowledge that they are less likely to be targeted over security concerns in Asia than in the West.

For Prince Alwaleed, a major investor in the United States with a personal fortune estimated at US$23.7 billion, yesterday's bid could lead to the latest of the high-profile acquisitions that have made him one of the world's best known investors.

"The acquisition affirms the consortium members' belief in the importance of diversifying," the statement said. "The consortium members also believe that financial services in general ... form the main foundation of the Chinese economy."

China is listing its big lenders to try to whip into shape the long-ailing banking industry before the sector opens further to foreign competition at the end of this year under Beijing's World Trade Organisation commitments.

Bank of China raised US$9.7 billion after pricing its IPO near the top of the indicated range.

The offering was heavily oversubscribed as investors scrambled to tap China's surging economic growth. It will become the fourth-largest IPO in history if, as expected, Bank of China exercises an over-allotment option that will expand the deal to US$11.1 billion.

The IPO values the Beijing-based bank at US$92.4 billion, ranking it 10th among banks in the world, just ahead of Spain's Santander and just behind Mizuho Financial Group of Japan.

Prince Alwaleed's most famous bank investment was the large stake he bought in a then-troubled Citigroup, a deal that propelled him into the public spotlight in the West.

The 50-year-old prince has amassed an enormous fortune from investing in shares, property and recently the Arab music and entertainment industry, all under Kingdom Holding.

He has acquired substantial interests in AOL, Apple Computer, Worldcom, Motorola, News Corp and others.

More recently he teamed up with Colony Capital in a US$3.9 billion deal to buy Fairmont Hotels & Resorts.

- REUTERS