Brookfield, CVC, wealth funds eye stake in Starbucks franchise

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Brookfield Asset Management Inc. and CVC Capital Partners, alongside sovereign wealth funds, are among parties that made first-round bids for a minority stake in Kuwaiti conglomerate Alshaya Group’s Starbucks Corp. franchise, according to people familiar with the matter.

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Abu Dhabi’s ADQ and Mubadala Investment Co. and Saudi Arabia’s Public Investment Fund also submitted separate non-binding offers to buy a 30 per cent stake in the business in recent weeks, the people said, asking not to be named because the information is private.

The owners have indicated they value the business at US$15 billion but prospective buyers expect bids to value it closer to around US$11 billion, the people said. JPMorgan Chase & Co. is handling the sale on behalf of Alshaya, Bloomberg News previously reported.

The Starbucks business offers potential buyers instant access to around 1,700 outlets in 14 markets that span some of the biggest emerging economies, from Saudi Arabia to Russia and Turkey.

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Buyout funds seeking to deploy cash before interest rates rise further, and regional wealth funds looking to bolster their consumer exposure have all emerged as potential suitors, the people said.

GIC Pte. and Temasek Holdings Pte. and Dubai Holding LLC, a conglomerate tied to the emirate’s ruler, have also expressed interest, they said. Bidders may also discuss teaming up to form a consortium.

Piquing interest

The potential involvement of funds from outside the region would represent a rare example of international buyout firms showing interest in a Middle Eastern asset beyond infrastructure in the years following the 2018 collapse of Abraaj Group.

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Representatives for Alshaya, Brookfield, CVC, PIF and Temasek declined to comment. ADQ, Dubai Holding and Mubadala didn’t respond to requests for comment.

Established in 1890 and believed to be Kuwait’s oldest company, Alshaya is one of the Middle East’s largest operators of popular retail brands such as Victoria’s Secret and the Cheesecake Factory. Seattle-based coffee chain Starbucks is Alshaya’s biggest franchise.

The group runs more than 4,000 stores across the region, from Dubai with its cavernous malls to Turkey and Russia, boasting a total of nearly 70 brands. The company employs more than 50,000 people and counts H&M, P.F. Chang’s and The Body Shop in its regional portfolio, according to its website.

Bloomberg.com