'100 wives' deliver the ultimate kick

Alwaleed bin Talal bin Abdulaziz al-Saud's big leap forward came in 1991 when, at the bottom of the recession, he invested in Citicorp. Picture / Reuters

Alwaleed bin Talal bin Abdulaziz al-Saud is a legend. His US$590 million ($845 million) investment in Citigroup is now worth US$10 billion. The US$115 million he put into Apple has soared to US$1.8 billion.

In a 20-year investment career, he has amassed a US$24 billion fortune and rescued fallen stars such as Canary Wharf, Euro Disney and Planet Hollywood.

With the legend comes the mystery. Who is he? Did his fortune come from Saudi Arabia's oil wealth? How does he work his magic?

There is a simplicity about Alwaleed: when he says he looks for investments that provide long-term returns, he means it.

He is energetic and articulate - his colourful character comes across in his wild gesticulations as he talks.

His responses to questions are concise and delivered in rapid-fire bursts. Without hesitation he can recall detailed information about any of the companies he invests in.

"What drives me is success, results, performance and achievement," he says, adding that watching his shares go up gives him the "ultimate kick".

On his investment-hunting trips round the world, Alwaleed often visits tens of countries in a matter of days. He travels on one of his fleet of three Boeings, including a 747 fitted with wireless broadband. He and his entourage often work 24 hours a day. These are Alwaleed's "holidays".

"It is a myth that, to relax, a person has to be sunbathing and think of nothing. Forget it. I am against that."

The schedule at home in Saudi Arabia is no less demanding. He gets up at 10am after five hours' sleep and works until midnight every day.

A grandson of King Ibn Saud, the founder of modern Saudi Arabia, Alwaleed's immediate family never had the immense wealth enjoyed by many of his relations. Having become, at 14, the youngest man to join the Saudi military, he soon developed an interest in business, listening to the BBC news on the radio every day as well as reading political magazines and newspapers.

In 1976, he enrolled in a business course at California's Menlo College. On returning, he was given a US$30,000 loan from his father and a house that he mortgaged, raising about US$400,000. In addition, as a Saudi prince, he was receiving an allowance of US$15,000 a month.

He speculated in property and then invested in Saudi Arabia's poorly managed banks.

"I always loved banking," he says. "Look at any country - what's the heart of the country? It's the economy. What's the heart of the economy? It's banking."

The big leap forward came in 1991 when, at the bottom of the recession, he invested US$590 million in Citicorp, which merged with Travellers Group seven years later to create Citigroup, the world's biggest bank.

Alwaleed's investment in the company soared almost 20 times in value and his 4 per cent stake is now worth US$10 billion.

What he describes as the best financial decision of his life turned him into a business celebrity. A mere mention of Alwaleed's Kingdom Holdings investing in companies is enough to increase interest in them, yet his stock-picking strategy is surprisingly straightforward.

He invests in companies that "have a global presence and are facing difficulties, either because of cyclical events, economic downturn or management that isn't solid".

Alwaleed seeks a minimum 20 per cent annual return on any investment. The secret is investing in brands.

"All the companies we are involved in, they were excellent brand names, blue-chip names, but they were facing difficulties.

"So it was not a hopeless case. They just needed some money, needed some guidance," he says.

Alwaleed believes a strong management team has to be in place to execute a recovery plan. He lists the hallmarks of good management as "integrity, straightforwardness, openness, having a good strategy and good planning ability".

As with that other great investor, American Warren Buffett, Alwaleed is there for the long term.

"There are some assets I would never sell," he says.

"My Citigroup shares will never be sold; my Four Seasons [the luxury hotel group] shares will never be sold; some of my strategic hotels, such as the George V, will never be sold. My News Corp shares will never be sold and my Time Warner shares will never be sold."

His reasoning in holding on to these shares is because "the entry barrier is so high" for any would-be competitors.

With an annual income of about US$500 million from dividends, he reaps huge rewards from retaining his shares. His biggest challenge is finding new opportunities and, in this, he has just 10 close advisers - five of them from Citigroup's private-banking arm.

He is always accompanied by one of them on his travels.

Although he emphasises that he prefers people who are critical of his suggestions and do not simply agree with him, Alwaleed has the final word on all his investment decisions.

And all the money and the best advisers have not been able to stop him making mistakes.

"With a big portfolio like this, there is no way that all the companies will be all right," he says.

In 1997, Citigroup's shares crashed, taking the value of his holding down by US$640 million. But as Alwaleed points out: "These are theoretical hits, because it's a hit only if you sell."

He says that if his shares in a company he believes in crash, he never sells, as the best deals can be found straight afterwards.

"When there's a panic, I'm always happy."

He invested heavily in the dot-com boom, putting money into eBay, Amazon and priceline.com, but then raised his shareholdings after the bubble burst.

And in the six months after the September 11 attacks, he increased his shareholdings in Citigroup and Time Warner by US$1 billion.

Similarly, he has twice saved the troubled Paris theme park operator Euro Disney and is in for the long haul, saying of his 10 per cent stake: "We will not sell it."

He explains: "It's like you have 20 or 30 children. If 19 are doing good and one of them sometimes gets a C in class, you give them private lessons until they make the C a B or an A."

He talks with affection of his investments, calling the plaques bearing their logos, mounted on his office walls, his "hundred wives".

And he wants nothing to come between him and his trading. He doesn't even sit on the boards of any of the companies he invests in because he doesn't want to be classified as an "insider".

He has no ultimate goal, thinking more of people less fortunate than himself.

"If there's any catastrophe in the world, I will contribute," he says, explaining that Islamic law decrees he should give to charity 2.5 per cent "of a certain formula" of his wealth.

In fact, it is estimated that he gives more than US$100 million a year to good causes.

"I believe that every person, when God gives them all these blessings, has a responsibility to give back to the world.

"You can't just stack money - it is not right."

Drive to top

Alwaleed is now worth US$24 billion.

He started with a US$30,000 loan from his father in the late 1970s.

A house he mortgaged raised another US$400,000.

In addition, as a Saudi Prince, he received a monthly allowance of US$15,000.

He makes US$500 million a year in dividends.

He gives US$100 million to charity annually.

- INDEPENDENT