Alwaleed Plans to Boost His Stake in Citigroup to 5% Bloomberg

This year, Alwaleed's investments aren't keeping pace with regional and global benchmarks. His Riyadh-based Kingdom Holding Co. has slumped 63 percent -- more than Saudi Arabia's Tadawul All-Share Index or Buffett's Berkshire Hathaway Inc. -- wiping out $13 billion in value.

Alwaleed Plans to Boost His Stake in Citigroup to 5% (Update2)

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By Steve Dickson
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Nov. 20 (Bloomberg) -- Saudi billionaire Prince Alwaleed bin Talal plans to increase his stake in Citigroup Inc. to 5 percent after the bank, once the biggest in the U.S., lost almost a quarter of its value yesterday.

Alwaleed, who owns less than 4 percent of the New York-based company, said in a statement he's buying shares because he ``strongly believes that they are dramatically undervalued.'' The stock fell to a 13-year low of $5.42 in New York trading today.

Citigroup, buffeted by four straight quarterly losses, has raised about $75 billion since December by selling assets and equity stakes, including a $25 billion injection from the U.S. Treasury. Alwaleed would have to spend about $350 million to boost his stake to 5 percent from 4 percent, based on yesterday's closing price.

``They're long-term investors and that's about the only kind of person putting money in here these days,'' said Ralph Shive, chief investment officer at 1st Source Corp. Investment Advisors in South Bend, Indiana, which manages $3 billion. ``The long-term people with that perspective seem to think these are pretty good values,'' said Shive, who doesn't own Citi shares.

Citigroup, down 79 percent this year, dropped 76 cents to $5.64 in New York Stock Exchange composite trading at 9:59 a.m., a 12 percent decline. Citigroup was surpassed in market value yesterday by U.S. Bancorp, Minnesota's largest bank.

Chief Executive Officer Vikram Pandit said this week the bank will cut 52,000 jobs in the next year, double the target announced in October, as loan losses surge and the economy shrinks.

`Long-Term Winner'

Those steps will help make Citigroup ``a long-term winner in the financial-services industry,'' Alwaleed, 53, said. He said he ``expresses his full and complete support to Citi management, led by CEO Vikram Pandit, and believes they are taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy.''

The bank has lost about $20 billion in the past four quarters as bad loans increased and demand for banking services declined. Analysts surveyed by Bloomberg expect a $673 million deficit for the fourth-quarter.

Citigroup plans to wind down seven failed off-the-books investment funds, the company said yesterday, ending Pandit's attempts to salvage the so-called structured investment vehicles after at least $3.3 billion of writedowns this year.

Alwaleed was lauded by Time magazine as the Middle East's answer to U.S. billionaire investor Warren Buffett after a 1991 investment in Citigroup's predecessor helped make him one of the world's five richest people.

Benchmarks

This year, Alwaleed's investments aren't keeping pace with regional and global benchmarks. His Riyadh-based Kingdom Holding Co. has slumped 63 percent -- more than Saudi Arabia's Tadawul All-Share Index or Buffett's Berkshire Hathaway Inc. -- wiping out $13 billion in value. Citigroup, his largest holding, has fallen by more than three-quarters since Jan. 15, when Alwaleed increased his stake.

In a 2005 interview with Charlie Rose of the U.S. Public Broadcasting Service, Alwaleed outlined his criteria for buying stocks. ``The return on investment in the coming five to 10 years has to be within our acceptable conditions,'' he said. That means ``at least 20 to 25 percent'' annual returns.

To contact the reporter on this story: Steve Dickson in New York at sdickson1@bloomberg.net.
Last Updated: November 20, 2008 10:00 EST



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