Alwaleed’s Kingdom Shuns Investment Banks in Hunt for Deals

Saudi billionaire Alwaleed bin Talal’s Kingdom Holding Co., which bought a $125 million stake in Chinese online retailer 360buy Jingdong Inc. this month, prefers to identify its own targets instead of using advisers.

“We do the origination ourselves,” Ahmed Halawani, the company’s head of private equity and international investments, said in an interview. “We do not wait for an investment bank to come and say ‘this is a group of companies and we think that potentially they will fit your strategic objectives.’”

Alwaleed, who owns 95 percent of Riyadh-based Kingdom, has built a fortune of $28 billion amassing stakes in Citigroup Inc., News Corp. and Apple Inc., according to Bloomberg Billionaires Index. Kingdom led a group of investors taking a $400 million stake in 360buy on Feb 16, returning to China after exiting investments before the financial crisis, Halawani said.

“We left China when it became so crowded and the valuation was compelling,” he said. “We withdrew in 2007 before the crisis and now when the valuation is compelling, we came back.”

Alwaleed offered $2 billion in 2006 for a 2.7 percent stake in Bank of China Ltd.’s initial public offering and was awarded about $390 million of stock, people familiar with the matter said at the time. Twitter Inc., the microblogging service, received a $300 million investment from Kingdom in 2011 and is set for growth over the next five to 10 years, Halawani said.

Identify Company

“What we do is we identify a company and we get to know it very well,” Halawani said Feb. 19 from the company’s offices in the Saudi capital. “We do our preliminary due diligence on the company and if it ticks all of our boxes, we target it.”

Halwani worked for over ten years as Chief Executive Officer of Al Azizia Commercial Investment Company, one of Saudi Arabia’s best-known investment firms and a Kingdom subsidiary. Prior to that, he worked in private sector development for the World Bank and for Procter & Gamble Co., according to Kingdom’s website. He is one of nine board members at the company.

360buy is an online shopping mall that provides more than 7 million products ranging from home appliances and books to clothing and accessories. It is China’s second-largest Internet retailer with a 12.6 percent share of the market, lagging Alibaba Group Holding last year, according to Euromonitor International.

China Users

The number of online users in China gained 10 percent last year to 564 million, more than the population of any country except India, the government-run China Internet Network Information Center said last month. China’s online-retail transactions are projected to more than double to 2.57 trillion yuan ($412 billion) by 2015 from 1.22 trillion yuan last year, according to Analysys International, a Beijing-based researcher.

“360buy is a high growth business, top-line growth,” said Halawani. “There is a visibility at least for the coming five years. The company is still scratching the surface in terms of its growth potential.”

Kingdom Holding is planning to build a 1 kilometer-high (0.62 mile-high) skyscraper in the Red Sea port city of Jeddah, seeking to surpass the Burj Khalifa in Dubai as the world’s tallest tower. The company received shareholder’s approval in March 2012 to sell as much as 3.75 billion riyals ($1 billion) of bonds inside Saudi Arabia or abroad.

Kingdom rose 0.5 percent to 20.15 riyals as of 12:16 p.m. in Riyadh and gained about 90 percent in the past year.