Yahoo Finance Saudi Arabia and Gucci owner circle Selfridges
Saudi Arabia and Gucci-owner Kering are said to be circling Selfridges as the insolvency of the department store’s co-owner triggers a battle for the business.
Saudi Arabia’s Public Investment Fund (PIF) and luxury goods giant Kering, which is owned by French billionaire Francois Pinault, are both thought to be interested in a stake in Selfridges, according to City sources.
Interest has been triggered by the collapse of Signa, the Austrian company run by businessman Rene Benko that owns half of Selfridges’ property company.
The insolvency has led to its stake in the retailer becoming available. City sources have said Selfridges is in play but the sale process is complicated by proceedings in Austria.
It is understood that Selfridges’ other co-owner, Thailand’s Central Group, is seeking a new partner as the future of fellow shareholder Signa looks increasingly uncertain.
Saudi Arabia’s Public Investment Fund (PIF) is one of the parties understood to be interested in Signa’s stake, which covers Selfridges’ retail brand and its lucrative real estate on Oxford Street.
It comes after The Telegraph revealed last year that the kingdom was a private financial backer in the sale of Selfridges two years ago, which was conducted following an auction by the Weston family.
Saudi’s involvement stemmed from it providing the finance for Signa’s investment. It therefore could be in pole position should a bidding war for Selfridges emerge.
The Gulf kingdom has been on a dealmaking spree in recent years that has seen it invest heavily abroad, including in Britain where it has bought Newcastle United FC among others.
However, PIF could face competition from luxury goods giant Kering, City sources say.
Paris-listed Kering is worth €52bn and owns a suite of luxury brands including Gucci, Balenciaga, Yves Saint Laurent and Alexander McQueen.
The company has recently been buying up luxury retail space. In January, it bought the 115,000 square foot Fifth Avenue building home to its New York Gucci store for $963m.
A banker familiar with the matter described Central Group as the “king-maker” in the sale process, which is still in its early stages as Signa unravels.
Interested parties are believed to be waiting for a full outcome from Signa’s collapse before they formally declare an interest in the stake, which would be worth around £2bn.
“What Central are doing is watching their partner’s problems play out,” the source said. “Sitting, watching to see how it breaks. Of course, they are naturally interested to see what happens because they are going to have a new partner.
“It’s between retailing dynasties and sovereign wealth funds.”
Selfridges was bought by Signa and Central in a £4bn deal in 2021, with the business split between an operating company and a property company.
Both had been jointly owned by Signa and Central.
However, Central moved to seize control of the operating business during the turmoil at Signa late last year, converting a €364m (£317m) loan into a majority stake in the business.
Despite this, Signa still owns 50pc of the property company and holds around 35pc in the operating company.
Signa’s downfall led to Mr Benko filing for personal insolvency earlier this month, four months after his company crumbled under the weight of high interest rates and dwindling valuations.
Amid questions around its ownership, Selfridges has maintained that it trades independently of any support from its shareholders.
However, the situation has cast a shadow over the retailer, which has also been racing to cut costs in a major efficiency drive.
Last August, it unveiled plans to slash roles in its head office.
Andrew Keith, Selfridges managing director, told workers at the time that the company needed to be “fit for the future, aligned and working in the most efficient way”.
He said: “Regrettably this is likely to mean some of our head office teams, including some small teams in retail who support our stores, will be resized and reshaped.”
The move followed a year in which Selfridges lost almost £40m after it recorded a jump in costs.
Accounts for Selfridges Retail, which covers the business’s four UK stores, its website and its mobile app, revealed the company was struck by higher debt interest costs during the year to January 2023.
Its interest expense on lease liabilities was close to £100m, around 20pc higher than the prior year.
Signa and Central loaded Selfridges up with more than £1.7bn of debt in autumn 2022 by booking loans through a number of new trading and property entities.
Central Group and Selfridges declined to comment.
Kering declined to comment. PIF was contacted for comment.
