Saudi Billionaire Prince Buys Into Twitter
December 19, 2011

Saudi Billionaire Prince Buys Into Twitter

Saudi Arabian billionaire Prince Alwaleed bin Talal, one of the world´s leading investors in some of the biggest companies, has bought a stake in Twitter for $300 million, furthering his reach into the global media industry.

Alwaleed has a net worth just below $20 billion and is estimated by Forbes magazine as the 26th richest person in the world. He is the second largest investor in Rupert Murdoch´s News Corporation, at 7 percent, and has now put stake in Twitter in conjunction with his Kingdom Holdings Company investment firm. He also plans to start up his own cable news channel.

Twitter was a key means of communication for protestors in the Arab Spring revolts this year. The violence threatened Saudi Arabia until the kingdom unveiled a $130 billion social spending package.

Twitter is valued at roughly $8 billion, giving Alwaleed a 3.75 percent stake in that company. Alwaleed spent several months negotiating the deal with Twitter, which comes just after the microblogging site unveiled a comprehensive redesign of its site.

The redesign has split different elements of the Twitter experience into separate sections, which frees up more room for advertising potential. Twitter also streamlined its brand page options in what is being seen as a more pointed attempt to take on Facebook for commercial presence. The company also recently acquired Whisper Systems, a mobile security and encryption specialist, which Twitter may use to ramp up its privacy settings and make itself more secure.

For Alwaleed, the Twitter stake gives him another foothold in global media. “Our investment in Twitter reaffirms our ability in identifying suitable opportunities to invest in promising, high-growth businesses with a global impact,” he said.

Ahmed Halawani, executive director of private equity and international investments at KHC, said that social media will “fundamentally change the media industry landscape in the coming years.” And Twitter “will capture and monetize this positive trend,” he added.

“The Arab world, of course, knows full well the value of Twitter. In the past year, it has been a force in politics, in regime change, so there is not a single person in that region in a position of influence who is not following the increasing power of Twitter,” Bernhard Warner, co-founder of analysis and advisory firm Social Media Influence, told Reuters.

“(Alwaleed) must see Twitter as something that is going to be a really powerful broadcast channel,” Warner told Reuters reporter Sitaraman Shankar, adding the Saudi had got into the internet boom belatedly, with mixed results, and appeared to be “kind of late” to the game again.

But Saudi investors were confident in the latest deal.

“One of the few sectors to record significant revenue gains in the last three years has been technology, which is why Kingdom would see Twitter as a good addition to its diversified portfolio,” Hesham Tuffaha, head of asset management at Bakheet Investment Group in Riyadh, told Shankar.

Saudis are increasingly turning to satellite TV, online news, and social media to stay on top of world events.

Twitter has said it was in no hurry to go public, but investors have been anxiously awaiting an IPO for some time. The popular microblogging site raised $400 million in venture capital financing earlier this year.

The site has more than 100 million active users who log on at least once per month. Although that´s a far cry from Facebook´s 750 million active users. And Google+ social network could lure Twitter´s users away, according to some industry observers.

And, based on a 5 percent discount on gaming developer Zynga´s issue price on their trading debut on Friday, some analysts say any valuation for Twitter could be misleading as well.

“You could put any number of zeroes behind a valuation of a private company. Before it goes public, it is almost meaningless,” Warner added. “This is a very small group of investors which has put money into this thing. That will be diluted and diluted and diluted again until it goes public. And that is when we will see what the value is. These are kind of magic numbers at the moment.”

Alwaleed´s KHC investments include a 30 percent stake in Saudi Research and Marketing Group, and a large stake in Citigroup. It also has investments in Amazon, Apple, Coca Cola, eBay, Four Seasons Hotels and Resorts, Ford Motor Company, General Motors, HP, Motorola, Proctor & Gamble, and several others.

Alwaleed also said in August he plans to construct the world´s tallest tower in Jeddah.


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