Dubai-based Al-Futtaim is buying a 49.95 per cent stake in Saudi Arabia’s retail group Cenomi for 2.5 billion Saudi riyals ($666 million) as the company aims to expand in the Arab world’s largest economy.
Al-Futtaim has entered into a share purchase agreement with Cenomi’s founding shareholders Fawaz Abdulaziz Alhokair, Abdul Majeed Abdulaziz Alhokair, Salman Abdulaziz Alhokair, Saudi FAS Holding Company and FAS Real Estate Company as part of the transaction.
The deal involves Al-Futtaim buying 57,325,841 shares at a price of 44 riyals per share in Cenomi Retail, the company said in a statement on Sunday to the Saudi stock exchange, Tadawul, where its shares are traded.
Al-Futtaim and Cenomi Retail are also currently negotiating a shareholder loan agreement pursuant to which Al-Futtaim will extend a shareholder loan of an amount not less than 1.3 billion riyals, upon completion of the transaction, to help strengthen Cenomi Retail’s balance sheet and support its growth.
The transaction, however, is subject to customary regulatory approvals, including clearance from the General Authority for Competition in Saudi Arabia, and other contractual conditions.
“This investment represents substantial foreign direct investment from the UAE private sector and underscores the robust economic partnership between our countries,” Omar Al Futtaim, vice chairman and chief executive of Al-Futtaim, said.
“We see significant opportunities to support Cenomi Retail in enhancing operations, accelerating digital transformation, and expanding its brand portfolio. This partnership also paves the way for further collaborations in the dynamic Saudi market.”
Saudi Arabia aims to attract more foreign direct investment as it focuses to diversify its economy away from oil as part of its Vision 2030 programme.
It is building mega projects such as Neom, Qiddiya entertainment city, outside Riyadh and the Diriyah Gate in a push to support its real estate sector.
In recent years, the kingdom has also introduced laws, including companies law and civil transactions law, to attract more foreign investment.
This month, it updated its rules to allow foreigners to buy property in specific zones in Riyadh and Jeddah, with “special requirements” for home ownership in Makkah and Madinah.
It also opened its stock exchange to residents of Gulf countries, who are now allowed to invest directly in the kingdom’s main Tadawul market as part of the reform programme.
“Al-Futtaim’s global retail footprint, financial strength, and presence in the kingdom make them an ideal strategic investor,” said Fawaz Abdulaziz Alhokair, one of the selling shareholders of Cenomi Retail.
“This strategic investment unlocks significant value for all stakeholders and aligns with Saudi Arabia’s Vision 2030 to diversify the economy and attract foreign investment.”
Al-Futtaim, a privately held business group, is active in 18 countries in the Middle East, North Africa and Asia, with interests in automotive, financial services, real estate, retail, and health sectors. It represents a portfolio of more than 200 brands, including Toyota, Lexus, Ikea and Marks & Spencer.
Cenomi Retail, formed as Fawaz A Alhokair & Co in 1990 by Fawaz, Abdulmajeed and Salman Alhokair, operates 808 stores across 165 shopping malls in eight countries. It currently represents 47 brands, spanning womenswear, children and baby, department stores, shoes and accessories, cosmetics in addition to operating a series of restaurants and coffee shops.
Last month, the International Monetary Fund revised Saudi Arabia’s economic growth upwards amid the unwinding of production cuts by Opec+ members.
The kingdom's economy is forecast to grow by 3.5 per cent this year, up from a projection of 3 per cent in April, and 3.9 per cent in 2026, an upwards revision of 0.2 percentage points from the last prediction.
