The Saudi-based Kingdom Holding Company will lead a consortium of investors to acquire a US $399 million stake in a Chinese online retail firm.
The investment firm, controlled by Saudi billionaire Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, will be acquiring a share in 360buy Jingdong Inc. The online retailer is the biggest seller of consumer electronics in the Chinese virtual market. The deal signals a growing interest of Kingdom Holding’s in major online firms. It had made a US $300 million investment in Twitter last year.
According to Prince Alwaleed, the buyout will further strengthen the strategic relationship between Saudi Arabia and China. An official statement by Kingdom Holding’s reads that, “this deal confirms KHC’s expertise to seek rewarding global investment opportunities, and to capitalize on them in light of their potential IRR in order to extract value for KHC shareholders.” The management of 360buy Jingdong Inc is also looking forward to a “long lasting and constructive relationship” with Kingdom Holding.
In recent years, Kingdom Holding has pursued a private equity investment strategy of selecting high growth companies for acquisition. These firms, which include Apple Inc and News Corp, have a track record of growing exponentially and have the potential to be listed in one of the international capital markets within three years. With the demand for online services set to continue to boom in coming years, companies in e-commerce and technology are becoming a Kingdom Holding favorite.
Kingdom Holding already maintains presence in China through Citibank. Prince Alwaleed also owns Disneyland Hong Kong, Four Seasons Hotels and Fairmont Raffles Hotel. The Saudi equity market responded positively to this development, with the shares of Kingdom Holding closing 6.1 percent higher to 22.50 riyals. The share price is currently at its highest level in five years.