Saudi Prince al-Waleed bin Talal's Kingdom Holding Co. is preparing to sell shares in an initial public offering that values the company at 64.6-billion Saudi riyals, or $17.2-billion (U.S.), a company official said.
"The company is performing well and it's now time to take it to the next stage," said P.J. Shoucair, executive director for international investments. "We can expand further."
Prince al-Waleed, ranked by Forbes magazine as the world's 13th richest person, is putting part of his company up for sale as fellow billionaires Henry Kravis and George Roberts plan a $1.25-billion IPO for their New York-based buyout firm, Kohlberg Kravis Roberts & Co. Like Berkshire Hathaway Inc. chairman Warren Buffett, the second-wealthiest man in the United States, Prince al-Waleed built his $25-billion fortune by investing in undervalued brand-name companies.
"I have no doubt that the response will be pretty good on the IPO," said Faisal Hasan, head of research at Global Investment House KSCC, Kuwait's biggest investment bank. "It should get a strong public response because of the background of the company."
Kingdom Holding Co. was established in 1980 and initially focused on construction projects before evolving into one of the largest investment companies in the United States and elsewhere. In 2006, its total assets were valued at $24.65-billion.
Fully owned by Prince al-Waleed, the company holds stakes in Rupert Murdoch's News Corp., Fairmont Raffles Hotels International Inc., Time Warner Inc., Apple Inc., PepsiCo Inc., Walt Disney Co. and other corporations.
The IPO for 5 per cent of Kingdom Holding Co. will run from July 10 to 18 on Saudi Arabia's stock exchange, the Saudi market regulator said. Saudi institutional investors have already sought more than twice the shares they were offered, said two people with knowledge of the matter.
Kingdom has no plans to offer more than 5 per cent of its shares to investors, Mr. Shoucair said.
The company's adviser, Samba Financial Group, recommended to Prince al-Waleed that 5 per cent would "provide sufficient liquidity for the shares to trade in the aftermarket," he said.
Prince al-Waleed said in Feb., 2006 that he planned to sell at least 30 per cent of Kingdom to benefit from a public company's "better access" to debt and equity markets. Saudi Arabia's Tadawul All Share index tumbled by 47 per cent in the year to June 30, making it the worst performer of all equity benchmarks tracked by Bloomberg.
"The IPO market is less welcoming than it was," said Giyas Gokkent, head of research for National Bank of Abu Dhabi PJSC.
The 52-year-old prince will own 93.5 per cent of Kingdom after the sale, according to an offer prospectus.
Some Saudis may shun Prince al-Waleed's shares because Kingdom's holdings in Citigroup and Four Seasons aren't in compliance with a ban on interest payments and alcohol under Muslim shariah law, said Zeyad Awad, head of research for Riyad Bank.
"It will not be shariah-compliant so demand from the retail public will be minimal," Mr. Awad said. "The demand will probably come from the very high net-worth individuals and potentially conventional mutual funds."
Kingdom has said its average return on investments over the last 16 years is 20 per cent, outperforming the Morgan Stanley Capital International and Standard & Poor's global indexes.
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