Real estate has been central to the Company’s portfolio since its foundation. The initial focus has been on domestic opportunities. KHC acquired a portfolio of prime undeveloped land in Riyadh at the depressed prices which prevailed during the economic uncertainty of the 1990s. Much of this land was later developed into the landmark Kingdom Centre, while the balance was resold at a profit.
Thereafter, KHC entered the international real estate market. The strategy was twofold: to identify and invest in landmark real estate developments such as Canary Wharf; and to acquire or invest in underperforming hotel assets with both the capacity to be turned into flagship hotels in their regions, such as the George V Hotel in Paris, the Plaza Hotel in New York and the Savoy Hotel in London, and the capacity to generate synergies with its wider portfolio and specifically the hotel management business.
Most recently the focus has once more been on the MENA region and Saudi Arabia in particular, with a view to repeating the success of the initial real estate investments and the Kingdom Centre development by means of a proposed new landmark Project in Jeddah and a proposed further real estate project in Riyadh.
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Hotel Management & Operations |
Since 1994, KHC has been selectively developing an extensive holding of hotel management companies. It began by acquiring a 22.5 percent stake in Four Seasons Hotels and Resorts, becoming an anchor investor in that company and developing a close strategic relationship with its chief executive officer and founder. Also in 1994, KHC purchased a stake in Fairmont Hotels and Resorts. This acquisition was followed by the purchase of a significant minority stake in 1998 in the Swiss based MövenPick Hotels and Resorts.
In 2000, the Company's Middle Eastern hotel assets were consolidated into a stand-alone Company, Kingdom Hotel Investments ("KHI"), and other prominent regional investors became shareholders in KHI. The Company worked closely with KHI management to increase KHI's portfolio of assets and achieve a successful floatation of KHI shares on the DIFX market, together with a listing of global depositary receipts (GDRs) on the London Stock Exchange.
The Company has supplemented the portfolio and positioning of Four Seasons and Fairmont by acquisition. For example, in 2007, the Company, along with Colony Capital, a global real estate private equity investor, took Fairmont Hotels and Resorts private and subsequently combined it with Raffles, thereby creating Fairmont Raffles Holding International ("Fairmont Raffles"), one of the world's largest hotel companies. In addition, by acquiring the George V hotel and placing it under Four Seasons' management, the Company provided Four Seasons with its flagship hotel in Europe.
In 2006, the Company, along with Cascade Investment, an entity owned by Bill Gates, and Isadore Sharpe, acquired all of the outstanding shares of Four Seasons Inc. and took the company private.
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Banking & Financial
Services |
KHC’s investments in the banking sector started in Saudi Arabia with the acquisition in 1986 of a controlling stake in United Saudi Commercial Bank when it was experiencing financial difficulties. A number of management and operational changes were implemented to improve the bank's financial performance. In 1997, Prince Alwaleed initiated the merger of United Saudi Commercial Bank with Saudi Cairo Bank, which was experiencing financial difficulties, to create United Saudi Bank, then the fifth largest bank in Saudi Arabia. In 1999, United Saudi Bank was merged into SAMBA to create one of the largest banks in the Middle East.
In the late 1980s and 1990s, Prince Alwaleed ventured abroad with a series of major investments in Citicorp, which has proved to be one of the portfolio’s most visible and successful investments yielding a lifetime internal rate of return of 27.3 percent (27.3%) per annum.
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Tech, Media, & Telecom |
Internationally, KHC’s core investments are in News Corporation, acquired in 1997 and Time Warner Inc. which resulted from a privately negotiated purchase of shares in Netscape in 1997. The Company also holds shares in other leading TMT companies such as Apple Computer, Inc. Regionally, there is a renewed investment focus on TMT through the Company's recent 25 percent (25%) investment in Saudi Research and Marketing Group, a leading media and publishing company in the Middle East.
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Consumer & Healthcare |
KHC's practical experience in the retail sector was initially gained through the acquisition, restructuring and consolidation of the Panda and Al-Azizia supermarket chains, which were ultimately merged with Savola Group (Savola) to create the largest food conglomerate in the Middle East. This experience was applied in acquiring interests in international retail and consumer products companies, including SAKS Inc.
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Industrial |
KHC’s significant minority interest in National Industrialisation Company ("NIC") was acquired in 1996, when it was generally considered to be an underperforming company. NIC was turned around through structural changes, disposals, mergers and cost-cutting, and became one of the leading industrial companies within the Middle East.
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Private Equity |
KHC holds interests in a number of local and regional private equity projects, as well as interests in investment companies in Saudi Arabia and Kuwait, which extend its investment reach throughout the region. Management expects that private equity projects will increasingly become an important focus of the Company for the foreseeable future as a means of capitalizing on the expected continued growth and liberalisation of the GCC markets.
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