Tuesday, June 19, 2007

Truth or Dare

If one were ambling along some pleasant promenade like the ramblas, and, glancing across the street, observed a Jew in a yarmulke, a Palestinian in a kaffiya sitting together at table in the cafe playing Go! and throwing back shots of JD, after which they would haka before resuming their game, all the while serenaded by Condi Rice belting out fado songs whilst playing the bazouki, one would be forgiven for pinching oneself to see if one were not dreaming, for the incongruence was, to say the least, overly-apparent.

Such was my feeling yesterday when, trolling the news-wires yesterday, I came across the Bloomberg report of Prince Alwaleed bin Talal's intended floatation of an $840mm portion of his closely-held conglomerate, Kingdom Holdings. Indeed, I did a double take. Why? Why would an immensely private investor, and alledgedly one of the world's wealthiest men (if reports are to be believed and there are no secret encumbrences upon the fortune), now decide he the public markets, limelight, and transparency are the best place for his business dealings? It is almost unimaginably (if one takes his fortune at face value) that he needs more capital than he has, or his current investment portfolio throws off. And if he did, why not simply take a private investment from the immense SAMA dollar hordes, or from from a private round amongst the now-overly flushed Princes? Perhaps he needs a public vehicle for acquisitions? However, the difference between a large wodge of illiquid Kingdom Holdings stock and cash is surely negligible, and most right-minded investors would, in any event, choose cash thank-you-very-much.

So what gives? Is Mr Alwaleed bin Talal AL Saud in some sort of financial trouble? Or perhaps he is simply making a grand statement that, like Sam Zell's sale of EOP, or Nils Taube's 1987 S&P call, will forever be written in the lore of financial markets. Whatever the explanation, in a savings glutted world of excess liquidity, and according to Bear Stearns' Chief Institutional Strategist Leo Tilman, one universally offering low returns, why is the Prince raising equity? The answer may yet be another tell-tale.

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