Unlock Editor’s Digest for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Thai investor Central Group is in the process of taking control of the company behind London luxury department store Selfridges, while its Austrian co-owner Signa is in financial crisis.
Central Group, owned by the Chirathivat family, said on Tuesday it would become majority owner of Selfridges Group – which also includes retailers De Bijenkorf in the Netherlands and Brown Thomas and Arnotts in Ireland – after converting a loan into equity . Central and Signa bought the group for £4bn almost two years ago.
The result comes after the couple earlier this year replaced a €354 million loan from Swiss bank Julius Baer with a €364 million short-term shareholder loan in late August.
Signa declined to comment on what the Central Group acquisition means for the future of Signa or the other retail stores it co-owns with the Thai company. Signa is currently a minority shareholder and Central declined to comment on the size of its own stake.
Central Group said: “The move cements Central Group as the owner and operator of Europe’s largest luxury department store group, offering its customers the best selection of brands, merchandise and exceptional experiences.”
Signa was founded in 2000 by Austrian developer René Benko, 46, and has developed into one of the most important real estate investors in Central Europe. Benko’s relationship with Central, which began when he sold a stake in Berlin’s flagship luxury department store KaDeWe to the company in 2015, has been one of the most consequential for Signa of the last decade.
Together they also own Munich’s most prestigious department store, the Oberpollinger, Hamburg’s top location, the Alsterhaus, and the Swiss luxury department store chain Globus.
The two are also in the process of building what they hope will become Vienna’s new luxury store: Lamarr – named after Austrian-born Hollywood actress Hedy Lamarr.
Signa’s financial difficulties have cast doubt on the future of all venues.
For more than a year, Signa has struggled to raise much-needed fresh capital to complete projects and service its increasingly burdensome debt.
Rising interest rates, falling commercial property values and a downturn in the luxury market have created a perfect storm for the sprawling Austrian real estate empire.
Its highly opaque, complicated ownership structure – which was controlled by Benko through a series of trusts until he agreed to give up his role in a restructuring last week – has heightened market fears about the group’s financial security.
A JPMorgan analysis on Tuesday estimates that Signa owes more than 13 billion euros to European banks and other companies – which include its own investors.
The scale and complexity of lending to the group is such that the European Central Bank is paying it special attention and requiring European banks to cushion possible losses.