Saudi Arabia's Public Investment Fund is close to buying a minority stake in Kuwait's Al Shaya Group, which operates the Starbucks coffee chain.
According to Arab Net, sources close to the negotiations of the sale deal revealed that the Public Investment Fund has emerged as the most likely candidate to buy the group that runs the Starbucks franchise in the Middle East, according to Bloomberg.
The sources said that the Public Investment Fund, whose assets amounted to $620 billion, is leading a group of investors vying for a stake in the company, and could reach an agreement in the coming weeks. One of the sources indicated that private equity companies may invest in Al-Shaya's debts along with the Public Investment Fund.
Alshaya, which works with JPMorgan Chase & Co., said it estimated the group's value at $15 billion, but potential buyers had expected bids close to $11 billion.
Immediate entry
The Public Investment Fund invests in companies across a wide range of industries as part of a key role in diversifying the Saudi economy. In May, the fund established the Saudi Coffee Company, which will invest more than $300 million over the next ten years to raise the kingdom's annual coffee production to 2,500 tons from the current 300.
Starbucks' business will provide the Public Investment Fund with immediate access to approximately 1,700 branches in 14 markets spanning some of the largest emerging economies, from Saudi Arabia to Turkey.
Established in 1890, Alshaya is believed to be the oldest company in Kuwait, and is one of the largest operators of popular retail brands in the Middle East such as Victoria's Secret and Cheesecake Factory, as well as the coffee chain Starbucks which is Alshaya's largest franchise.
The group operates more than 4,000 stores across the region, from Dubai to Turkey and Russia, and includes nearly 70 brands. It employs more than 50,000 people and has brands like H&M, PF Chang's and The Body Shop under its regional portfolio, according to its website.
