Saudi family investors get spooked by arrests

The recent arrest of a prominent Saudi investor has unnerved private investment offices in the Kingdom as they deal with the uncertainty of not knowing their investments are safe from being taken over by the government.

Last week, Saudi Arabia’s best-known investor, Prince Alwaleed Bin Talal, often called the Arabian Warren Buffett, was arrested by the Saudi authorities in an anti-corruption drive. Talal, a multi-billionaire, owns Kingdom Holdings, which has stakes in a wide-range of prominent global businesses, including Apple, Twitter, News Corporation, and Citigroup.

Alarmingly for local investors like family offices, a Saudi official told a UK newspaper: “Any asset or property related to these cases of corruption will be registered as state property.”

The CEO of Kingdom Holdings Talal Ibrahim Al Maiman released a statement soon after the arrest of Talal, effectively saying it was business as usual for the investment group. “The support of the Government of the Kingdom of Saudi Arabia to Kingdom Holding is a badge of honor for us. Our Company’s successful strategy remains intact and I look forward to advancing our business and create value to all our shareholders with the support of the Board and the highly capable management team that has served this Company since its listing on the Saudi stock exchange.”

Nevertheless, observers reckon most family investment groups will be fearful of the crackdown and how it will affect their businesses and investments. “Wealthy Saudis will be looking over their backs right now, hoping they are on the right side of Crown Prince Mohammed Bin Salman,” says a UAE-based investor, who wanted to remain anonymous.

Mohammed Bin Salman, or MBS as he is often referred to and is the heir to the Saudi throne, is leading the anti-corruption drive. The investor adds: “One thing is for sure, they (family offices) won’t be doing much investing for the next few months.”

Talal’s son, Prince Khaled bin Alwaleed bin Talal, runs a Dubai-based investment group called KBW Investments, which, according to its website, also has offices in Saudi Arabia, Qatar, Italy and Romania. It is not known how the arrest of Khaled’s father has affected his business and his investments, which include tech companies and property around the world.

There are many more family investment groups often linked to family-controlled holding companies in Saudi Arabia. Their relationship with MBS is likely to have a bearing on their fortunes in the coming years.