Saudi Arabia becomes junior partner in Selfridges with 40% stake

Saudi’s Public Investment Fund (PIF) has struck a deal to become the junior partner in the London-based department store Selfridges after buying out bust Austrian property tycoon Rene Benko’s Signa.

The new deal sees PIF increase its stake from 10% to 40% – in both the property and operating businesses of Selfridges. Thailand’s Central Group, a family-owned retail conglomerate, has upped its stake to 60%.

Central will strengthen its grip on the retailer, according to The Telegraph, ending months of uncertainty over Selfridges after a fraud investigation was launched into Rene Benko earlier this year.

Selfridges was acquired by Central Group and Signa for £4 billion in 2021 from the Weston family, with the business separated between an operating company and a property company.

However, Signa – owned by billionaire Rene Benko – filed for insolvency in December 2023 amid financial troubles, bringing the future ownership structure of the department store into question. Following this, Central Group moved to take control of the operating business late last year, converting a £317 million loan into a majority stake in the retailer.

But who would take control of the 50% stake Signa bought two years prior?

PIF had been a private financial backer to Signa as part of the Selfridges deal, in a ploy to flex Saudia Arabia’s wealth and boost its presence on an international stage.

Recent documents suggested that Signa had syndicated part of its stake in the business to PIF, which has held its 10% stake in Selfridges since the summer. In July, reports surfaced that PIF was looking to boost its stake to 50%. However, the latest update suggests PIF has now agreed to become the junior partner in Selfridges.

PIF, which is seeking to diversify its portfolio away from oil, also controls football team Newcastle United and has stakes in Sir Rocco Forte’s luxury hotels group and Heathrow Airport.

Tos Chirathivat, Central Group’s Executive Chairman, said that PIF was its “partner of choice in this distinguished company, and we are confident that PIF’s proven global track record of investments combined with our luxury retail industry expertise, brand management skills and innovative approach, will allow Selfridges Group to continue to flourish for the benefit of all its stakeholders”.

Central said the deal included new investment from both parties that would “strengthen Selfridges Group’s financial position and support the group’s future development”.

This nods to reducing debt levels across Selfridges’ property portfolio. Accounts reveal the company lost £38 million for the 12 months to January 2023, despite sales jumping almost 30% to £843 million.

Turqi Al-Nowaiser, Deputy Governor and Head of International Investments Division at PIF, added: “We are pleased to be partnering with Central Group in Selfridges Group, one of Europe’s most iconic luxury department stores. This transaction allows Selfridges Group to build on its position as a premier retail destination.”