The social networking site claimed the investment via the businessman's Kingdom Holding Company following several months of negotiations.
"Our investment in Twitter reaffirms our ability in identifying suitable opportunities to invest in promising, high-growth businesses with a global impact," Prince Alwaleed said.
Prince Alwaleed is one of the world's wealthiest businessmen, holding stakes in several global media outlets such as News Corporation. He also invests in numerous corporations in the Arab world.
"We believe that social media will fundamentally change the media industry landscape in the coming years. Twitter will capture and monetize this positive trend," he added.
Twitter is one of the world's largest social networking sites with more than 100m active users. The company introduced a major redesign for its website earlier this month.
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