Saudi Arabia SWF – Public Investment Fund (PIF) – has emerged as the private financial backer of the $5.13 billion takeover of Selfridges as part of a buying spree aimed at increasing its international clout and boosting the growth of its economy.
The Kingdom’s SWF has acquired a stake in the historic department store through Austrian property company Signa Holding, according to media reports.
The PIF is backed by Signa Fund which last August acquired a 50% stake in Selfridges. Signa entered an equal partnership with Thai retailer Central Group. Saudi Arabian finances represented a minority of Signa’s contribution.
The pair won an auction launched by the Weston family, owners of Selfridges since 2003, which was prompted after the death of patriarch Galen Weston. Signa and Central’s $5.13 billion bid came ahead of competition from Qatar’s sovereign wealth fund.
This is the third high profile deal concluded by the Kingdom’s SWF in the UK, the other two investments being acquiring majority ownership of Newcastle United in 2021 and becoming the second largest shareholder in Aston Martin last year.
PIF’s interest in Selfridges via Signa highlights that Saudi Arabia is using intermediaries to deploy some of its vast assets – most famously including Japanese technology powerhouse SoftBank and its Vision Fund, the reports said.
PIF on Investment Prowl
The PIF is spearheading efforts by Saudi Arabia’s Prime Minister and Crown Prince Mohammed bin Salman (MBS), to seek higher returns on the country’s vast oil revenues and gain expertise to drive economic growth. It has taken stakes in major Western technology and entertainment companies and financial institutions.
The Saudi Crown prince is investing hundreds of billions of dollars in NEOM, a massive urbanisation project that includes a 170 km long, 200 m wide “linear city” in the desert called The Line. Kingdom aims to attract well-known retailers and restaurants.
Saudi Arabia is spending heavily to bring sports including football, cricket, and golf to the Kingdom through its controversial LIV tour. It is also funding a new flag carrier airline to compete with regional rivals Emirates and Qatar Airways.
Signa and Central Group saddled the acquisition with additional debt under a structure that separates Selfridge’s assets from its retail business. The London branch of Bangkok Bank provided a $2.18 billion loan secured against the freehold of its flagship London store. Swiss lender EFG Bank also provided a loan against the Selfridges Exchange Square site in Manchester to finance the deal.
In its most recent accounts for the end of January 2022, Selfridge’s retail business reported a sharp rise in sales last year as shoppers returned following the pandemic. Revenue grew by 28% to $837.83 million, although it remained $256.61 million below its pre-Covid peak. Selfridge has since said that last year was her best Christmas ever, the reports added.