Saudi Arabia, Gucci and Kering-owned Gucci are said to be in a race for Selfridges after the bankruptcy of the department store co-owner triggered a battle over the business.
According to sources in the City, both Saudi Arabia’s Public Investment Fund and Kering, the luxury goods company owned by French billionaire Francois Piault, may be interested in buying a stake in Selfridges.
The failure of Signa, the Austrian firm run by Rene Benko who owns half the Selfridges property company, has sparked interest.
Insolvency led to the sale of its stake in retailer. Sources in the city have reported that Selfridges may be in play, but the sale is complicated by proceedings taking place in Austria.
Selfridges other co-owner Thailand’s Central Group is looking for a new investor as the futures of Signa and its fellow shareholder look increasingly uncertain.
Saudi Arabia’s Public Investment Fund is believed to be one of the parties interested in Signa stakes, which includes Selfridges retail brand and its lucrative property on Oxford Street.
The news comes after it was revealed last summer that the kingdom had been one of the private financiers in the sale two years ago of Selfridges, which took place following an auction conducted by the Weston Family.
Saudi Arabia’s involvement was due to it financing Signa’s investments. If a bidding battle for Selfridges were to break out, it could be in the lead.
In recent years, the Gulf Kingdom has invested heavily overseas. It has purchased Newcastle United FC and other clubs in Britain.
Sources in the City say that Kering, the luxury goods giant, could be a competitor to PIF.
Kering, listed in Paris, is worth €52bn. It owns a range of luxury brands, including Gucci and Balenciaga.
Recently, the company has been purchasing luxury retail space. It bought the Fifth Avenue building that houses its New York Gucci Store for $963m in January.
Banker who is familiar with the situation described Central Group as “kingmaker” in the sales process. The sale process has just begun as Signa falls apart.
The parties interested in the stake are said to be waiting until Signa’s collapse is complete before formally declaring an interest. This stake would be worth approximately £2bn.
Source: “Central is just sitting back and watching as their partner’s problems unfold,” said the source. “Sitting and watching how it breaks. They are interested in what happens, because they will have a new partner.
It’s between retailing families and sovereign wealth funds.
Signa and Central bought Selfridges in 2021 for £4bn. The business was split into an operating company and property company.
Signa and Central had jointly owned both.
Central, however, took control of the Signa business in late 2012, when the company was in turmoil. It converted a €364m loan (£317m), into a majority share.
Signa owns around 35pc of the operating company, and still holds 50pc.
Signa’s demise led Mr Benko to file for personal bankruptcy earlier this month. Four months after the company collapsed under high interest rates and declining valuations, he filed.
Selfridges, despite questions about its ownership, has insisted that it operates independently from any shareholders.
The situation, however, has cast a dark shadow on the retailer who has been rushing to reduce costs as part of a major efficiency campaign.
It announced plans in August to reduce the number of staff at its headquarters.
Andrew Keith, Selfridges’ managing director, said to employees at the time, that the company must be “fit for future, aligned, and working in an efficient way.”
He said: “Unfortunately, this will mean that some of our teams at head office, including small teams who support our retail stores, may be resized or reshaped.”
Selfridges had lost nearly £40m in the previous year due to a rise in costs.
Selfridges Retail’s accounts, which cover the four UK stores and their website, as well as the mobile app, reveal that the company has been hit by higher interest costs on debt during the year up to January 2023.
Interest expense on lease liabilities increased by around 20pc compared to the previous year.
Signa and Central piled more than £1.7bn in debt on Selfridges by autumn 2022, booking loans via a number new trading and real estate entities.
Central Group and Selfridges have declined to comment.
Kering declined comment. PIF was asked for comment.