Saudi prince detention holds up loan to investment firm

DUBAI: Kingdom Holding’s plan to borrow money to fund new investments has stalled because owner Prince Alwaleed bin Talal has been detained in Saudi Arabia’s anti-corruption crackdown, according to four banking sources familiar with the matter.
Kingdom had approached banks to obtain the loan, but the financing plan has been held up because the lenders are worried about potential repercussions if they lend to the prince’s company, the sources said.
One of the sources, who was approached for the loan, said it would have been worth roughly 5 billion riyals ($1.3 billion). A financing hold-up for Kingdom - a leading Saudi investment firm with stakes in prime real estate including New York’s Plaza Hotel and London’s Savoy Hotel - would suggest the crackdown this month is slowing new Saudi business activity. Asked for comment, Kingdom’s Chief Financial Officer Mohammed Fahmy said his company had not asked any bank for a formal loan commitment.
He said that terms of any financing deal were never finalised. More than 200 people were questioned and dozens of princes, officials and top businessmen detained in the anti-corruption purge. Over 2,000 bank accounts have been frozen by investigators, commercial bankers told Reuters. The Riyadh government has said the economy will not suffer because investigators are targeting only individuals, not their companies, which can continue to operate as normal.
In a statement issued soon after Prince Alwaleed was detained two weeks ago, Kingdom also said it was continuing to operate normally, and that it had the support of the government. But a loan hold-up would suggest some damage to the economy may be inevitable as banks, uncertain of the fate of majority owners of companies and unsure how far the crackdown will extend, become reluctant to extend new financing.