The Saudi Public Investment Fund shortlisted as bidder for share in Starbucks Middle East

• Dhivyanshu
• . June 8, 2022
• . Update: June 8, 2022 7:42 pm
• 1,770 Views

Saudi Arabia–Two sources informed Reuters that Saudi Arabia’s national wealth fund, the Public Investment Fund, had been nominated to buy a stake in Alshaya Group’s Starbucks franchise across the Middle East, North Africa, and Central Asia.

Alshaya Group, the region’s largest brand franchise owner, approached JPMorgan last year to sell a significant minority position in the company. According to the sources, it could sell up to 30% of its stock, netting $4 billion to $5 billion.

Starbucks operates in 14 countries across the Middle East, Russia, and Central Asia, with over a thousand locations. Starbucks’ locations in Russia have shuttered as a result of the country’s invasion of Ukraine, prompting the company to halt operations in the country.

As the sale process nears its conclusion, the PIF is among the bidders who have advanced to the next round, according to the source. Several private equity bidders, including CVC Capital Partners and Brookfield, were also in the running, but it was unclear whether they had been shortlisted.

According to the two sources, Abu Dhabi state funds Mubadala Investment Co. and Abu Dhabi state holding firm ADQ are no longer in the running. Mubadala declined to comment, while ADQ did not react to a request for comment right away.

According to one of the sources, the purchase would broaden the investor base of a company that has been privately controlled by the Alshaya family since 1999. Some of the Middle East’s largest privately held businesses are warming to the concept of attracting outside capital through public offerings or strategic share sales.

Saudi Arabia has seen a flurry of IPOs in recent years as the government promotes more family-owned businesses to go public as part of reforms aimed at lessening the country’s reliance on oil earnings. According to the second source, the monies raised may be put toward other Alshaya enterprises, and the company’s valuation is attractive, making the sale of a part appealing.

Alshaya Group, a privately held corporation, claims to be Kuwait’s oldest company, having been founded in 1890. H&M, Mothercare, Debenhams, American Eagle Outfitters, and Victoria’s Secret are among the brands it owns.