De facto ruler Crown Prince Mohammed bin Salman wants to bolster Saudi Arabia's international influence. Credit: BERTRAND GUAY/AFP via Getty Images
Saudi Arabia goes private Financial Selfridges takeover for £4bn in a shopping spree to boost international influence and boost the economy.
The kingdom's £500bn sovereign wealth fund, the Public Investment Fund (PIF), has acquired a £500bn stake in the historic department store through Austrian real estate company Signa Holding, sources in the city said. Signa has partnered with Thai retailer Central Group. Saudi Arabia's finances were a minor part of Signa's contribution.
The couple won an auction organized by the Weston family, owners of Selfridges since 2003, initiated by the death of patriarch Galen Weston. Signa and Central's £4bn offer outshone competition from Qatar's state wealth fund.
Signa is controlled by billionaire René Benko, who has been named by Austrian prosecutors as a suspect in a lengthy political corruption investigation. He denied any wrongdoing. PIF previously invested in Signa Sports, an online sportswear retailer listed in New York in 2021.
The deal with Selfridges will complete three high-profile investments by PIF in the UK after it acquired a majority stake in Newcastle United in 2021 and became Aston Martin's second-largest shareholder last year.
PIF's interest in Selfridges through Signa highlights how Saudi Arabia is using intermediaries, including Japanese tech company Softbank and its Vision Fund, to house some of its vast wealth.
Selfridges was sold by the Weston family for £4 billion. Credit: Jonathan Brady/PA Wire
PIF is spearheading efforts by Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman (MBS) to profit more from the country's huge oil revenues and build expertise to spur economic development. He has acquired stakes in a number of major Western technology and entertainment companies, as well as financial institutions.
MBS, who was invited to visit the UK in the fall despite a US assessment that he approved of the murder of journalist Jamal Khashoggi in 2018, is using the firepower of the PIF to improve the Kingdom's international position.
He is investing hundreds of billions in Neom, a massive urban project that includes a 170 km long, 200 m wide “linear city” in the desert called “The Line”. The Kingdom aims to attract well-known retailers and restaurants.
Saudi Arabia is also spending heavily to bring sports such as football, cricket and golf to the Kingdom as part of its controversial LIV tour. It is also funding a new flagship airline to compete with regional rivals Emirates and Qatar Airways.
PIF's interest in Selfridges opens up a new front in a bitter rivalry between Saudi Arabia and Qatar, which owns longtime London rival Harrods.
In the hands of Qatar, Harrods continued its international expansion by opening stores in airports and China. Selfridges, founded in 1908, does not yet operate outside the UK.
Signa and Central have loaded him with additional debt as part of a structure that separates Selfridges' ownership from its retail business. The London branch of the Bangkok Bank provided a £1.7bn loan secured by the ownership of its flagship store in London. Swiss lender EFG Bank also provided a loan to finance the deal, secured by Selfridges Exchange Square in Manchester.
In addition to providing capital for the acquisition, such debt structures can significantly increase yields. However, they can also create higher financial risks for the business, especially when interest rates rise.
In its latest reports for the year to the end of January 2022, Selfridges' retail business reported a sharp increase in sales last year as shoppers returned from the pandemic. Revenue rose 28 per cent to £653m, although it was still £200m short of its pre-pandemic peak. Selfridges has since said it had its best Christmas ever last year.
PIF declined to comment. Signa confirmed PIF's interest and said it had no intention of selling any of its stake in Selfridges.
A Signa spokesperson said, “The ownership of Selfridges has not changed.”
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