The share price of Central Retail Corporation Public Company Limited (SET: CRC) rose more than 3% in the morning session on Tuesday as investors feel more relieved on the concern over the burden of taking over Selfridges from Central Group.
According to the latest report, Saudi Arabia’s Public Investment Fund (PIF) is poised to become a minority shareholder in the Selfridges department store chain by acquiring the stake previously held by the now-bankrupt Signa Group. According to a statement from Central Group, the current co-owner, PIF will obtain a 40% interest in both the real estate and operational segments of Selfridges. The Thai retail giant, Central Group, will retain a 60% ownership, and both entities will infuse new capital to bolster Selfridges’ financial health.
Investors have always had lingering concerns over the take over of Selfridges department stores in Europe by its parent company, Central Group, fearing that it would need to raise capital to take on the investment as well.
Central Group fully took control of Selfridges late last year after its strategic partner that held a portion in Selfridges, Signa, filed for bankruptcy.
Central Group and the real estate tycoon Rene Benko’s Signa Group, bought Selfridges in 2021 in a deal worth $5 billion. However, Austrian co-owner Benko’s Signa faces a property crisis in Europe, which led to the tycoon handing over control of Signa to restructuring experts earlier in this month.
Central Group is owned by the fourth-richest billionaire in the country, the Chirativat family, according to Forbes. Central will gain control of the joint venture unit that was left by Signa, which also operates Brown Thomas & Arnotts in Ireland, and De Bijenkorf in the Netherlands.
CRC has always denied its involvement in the investment by Central Group.
CGS International Securities (Thailand) (CGSI) wrote in a note that what’s important here is that this deal includes fresh investments from both parties aimed at boosting Selfridges’ market position and driving its future growth. This implies that Central Group will likely need to inject more capital into Selfridges down the line, which could mean seeking additional sources of funding.
As a result, Central Group might look at selling part or all of its stake in the operating company of KaDeWe to CRC.
“From our perspective, if CRC can make this acquisition at the right price, ensuring an accretive return from day one, it would be a very strategic move. We see KaDeWe as having significant growth potential in Germany, making this a highly attractive opportunity,” wrote CGSI.
