Will Saudi's Warren Buffett rescue DLF's troubled Aman Resorts?

A report in The Economic Times said that Saudi Arabian billionaire prince Al Waleed Bin Talal was among the leading contenders to buy luxury hotel chain Aman Resorts, which has been put up for sale by beleaguered DLF, India’s largest real estate company by market value.

DLF wants to sell Aman Resorts, which has luxury properties across Asia and Europe, to cut down its huge debt load, which totalled more than Rs 21,000 crore at the end of June 2011.

[caption id=“attachment_95422” align=“alignleft” width=“380” caption=“Saudi Prince Al-Waleed bin Talal. Reuters”]  [/caption]

But don’t expect DLF to sell at rich valuations, despite the buyer being phenomenally wealthy. In the June-ending quarter, Silverlink Resorts, DLF’s overseas subsidiary that owns Aman Resorts, made a loss of Rs 6.72 crore on revenues of Rs 98 crore. Those losses and the fact that DLF wants to retain its 68-room Delhi hotel property, Aman Lodhi, could lower the valuations of the hotel chain, the report said. DLF is expected to get close to $300 million for the hotel chain, which would include a transfer of debt to the buyer, according to the report. It had bought the 25-hotel chain in 2007 for $400 million, including $150 million of debt.

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If the Saudi prince does indeed buy Aman Resorts, it will not be the first time he will be riding to the rescue of a troubled company, although this will be the first time he will be helping an Indian promoter.

So far, the prince has not made any major direct investments in India but the interest is there. Last year, the prince and his wife visited Mumbai and met some prominent business personalities, including Reliance chief Mukesh Ambani and Tata group chairman Ratan Tata to discuss economic and investment issues.

Over the past 20 years, Al Waleed, who is the nephew of King Abdullah of Saudi Arabia, has amassed a vast fortune through canny investments in global real estate and stock markets. The Middle East’s wealthiest businessman, he is the founder and CEO of Kingdom Holding Company, in which he owns a 95 percent stake.

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Often called Saudi Arabia’s Warren Buffett, he shot into the international investor spotlight when he reaffirmed his faith in a floundering Citibank in the aftermath of the global credit crisis of 2008 by boosting his stock holding in the bank, even after its shares had plunged 80 percent during the year. He later also made large investments in AOL, Apple Inc, MCI, Motorola, Fox News and other technology and media companies. Indeed, he ranks among the most influential foreign investors in the US.In 2010, he also invested $500 million in troubled American car-maker GM’s initial public offering.

Even in Europe, Kingdom Holdings has large stakes in the Four Seasons hotel chain, London’s prestigious Savoy Hotel and Monaco’s Monte Carlo Grand Hotel among other investments.

In a 2005 interview, 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.

Prince Alwaleed has kept a low profile after his stocks plunged in the wake of the financial crisis and wiped out half of his conglomerate’s equity. But since the latter part of 2010, he is believed to have resumed travelling globally seeking investors and acquisitions.

As of March 2011, his net worth was estimated by Forbes at $19.6 billion, making him the 26th richest person in the world.

More recently, just last week in fact, the Prince announced that he would launch a new Arab-language satellite news channel next year. Bloomberg will support the creation of five hours of financial and economic news programming throughout the day on the channel.

Earlier, in August, his company also announced it had signed a $1.2 billion contract with the Saudi Arabian Bin Laden group to build 1,000 meter-plus Kingdom Tower, which, when completed, will replace Dubai’s 828-meter Burj Khalifa as the tallest tower in the world.

Given that the prince likes to make large investments when he finds shares are highly undervalued, the current global slump in equities might see him back in the news more often from now on.