Middle East and Chinese investors are at Selfridges

Where is Selfridges second largest store? “Is it in Birmingham, or Manchester?” asked one of Central Group’s executive directors. Central Group is the Thai conglomerate which co-owns this historic department store chain.

It is a strange question to ask to a journalist, especially when it comes from a board member who wants to tighten their grip on the luxury retailer group.

The director belongs to the Chirathivat billionaire family that owns Central. The director asked to remain anonymous because the company wants to maintain a low-profile. However, the purchase of Selfridges by Central has thrust the media-shy firm into international spotlight.

The executive visited the London store, but admitted he did not know the details of the retailer’s operation. Selfridges has four UK department store, Brown Thomas and Arnotts stores in Ireland and De Bijenkorf stores in the Netherlands.

He knows that Central is desperate to gain greater control over Selfridges, amid the financial crisis engulfing Signa, its Austrian coowner and the property empire created by Rene Benko.

The Thai conglomerate is looking to buy out signa’s remaining share in the retail chain along with a partner. The Thai conglomerate is in discussions with several sovereign funds and tycoons to form a partnership.

Middle East and Chinese investors have been reported to be interested. The Public Investment Fund (Saudi Arabia’s sovereign fund), which supported Signa Selfridges’ bid, is said to be among the contenders.

Rene Benko is the man behind Signa, a property empire that includes Selfridges.

Qatar Investment Authority, which owns Harrods and Lane Crawford, an Hong Kong-based department store, may also renew their interest in Selfridges after initially trying to buy it when the billionaire Weston Family put it up for sale in 2021.

Insiders in the industry ruled out support from the London branch Bangkok Bank which gave a loan for £1.7 billion secured by the freehold of Selfridges store in West End.

Central is well-resourced and does not depend on outside funding, according to sources. It prefers to form joint ventures because it believes that other companies can “leverage its capabilities”.

Central was founded modestly in Bangkok by Tiang Chrathivat in 1925 as a small store. In 1956, he and his son Samrit opened Thailand’s first department store. Since then, the group has grown into a conglomerate that includes retail, restaurants and hotels. Tos Chirathivat is Central’s Chief Executive.

Central has a stable of high-end European department store brands, including Selfridges in the UK, KaDeWe in Germany, Rinascente in Italy, Globus of Switzerland, and Illum from Denmark. Central worked with Signa Holdings to acquire Selfridges KaDeWe, and Globus.

The Chirathivats want to grow their business and are looking for a bigger slice of the European retail market. Last week, members of the Chirathivat family attended the World Retail Congress in Paris to gain more knowledge about the European retail landscape and build relationships.

Tos Chirathivat, chief executive officer and executive chairman of Central Group

Central and Signa purchased Selfridges in 2021 from the Weston Family for £4 billion. W Galen Weston who bought Selfridges 2003 died and the retail group was sold. The Weston family is one of Canada’s richest families and still owns Fortnum & Mason, Primark, Associated British Foods, and Primark.

Central partnered with Signa to find a long-term partner. It was looking for a more stable investor than private equity investors. Each took a 50% stake in Selfridges. They later divided the business into two: an operating and a property company.

Signa, however, called in restructuring specialists in November due to a cash shortage, which cast doubt on the future ownership structure for Selfridges. Signa Prime Selection filed for bankruptcy at the end last year, after unsuccessful attempts to raise emergency funds.

According to the AKV Creditor Protection Association, Prime Selection is Signa’s largest real estate business with 54 properties worth about €20 billion.

Sources close to the situation say that Signa is preparing to sell its stake in Selfridges to pay off its creditors. Central is also interested. Last year, it acquired majority ownership in the Selfridges Operating Company through a £317m debt-for equity deal. This diluted Signa’s stake.

Signa now owns the remaining 60 percent of the operating company. Signa and Central still own the same percentage of the property company.

Uncertainty surrounds the future ownership structure. Central could take a larger stake in the Property arm and gain majority control of both group entities.

An insider told us that “Signa would soon be out of the Selfridges business.” There will be a balance in investment at Selfridges, whether it is 50% of the property company or the remainder of the operating company or both. Central will likely end up owning the company, along with a public fund [Pif]. The Pifs are known to buy up trophy assets, and they’re reliable partners. Central wants to ensure that it has a reliable investment partner.

The turmoil has cast an ominous shadow over Selfridges in London. This store has been setting the standard for high-street shopping since Harry Gordon Selfridge first opened his store on Oxford Street back in 1909. The Weston family who owned Selfridges almost 20 years ago stressed the importance of finding responsible buyers who would continue the legacy of long-term management.

Harry Gordon Selfridge was an American born entrepreneur who opened Selfridges in Oxford Street, 1909.

Signa’s plans for a new food hall and a hotel near the Selfridges Oxford Street shop are also in question. Since plans were announced last August, there hasn’t been any tangible progress in either area.

Central Group’s executive director suggested that the company could move forward with its plans as soon as it found a reliable partner. Selfridges continues to do well and is doing business, but the executive director at Central Group was disappointed that the government has scrapped the duty-free scheme for overseas tourists in the UK, leading to many shoppers abandoning London to go to other cities like Paris or Milan.

He said that Brexit had stunted the UK’s economy and that the country would have been better off remaining in the European Union.