Family members from Spanish retail empire El Corte Ingles have gone public with concerns about foreign investment in the privately-owned family business.
The company announced in July that it had approved a €1 billion financing deal by Sheikh Hamad Bin Jasim Bin Jaber Al Thani, Qatar’s former prime minister, through his company Primefin.
Ceslar, an investment vehicle controlled by the founder’s nieces, released a statement on Wednesday stating that the proposed deal was an attempt to sideline “traditional investors” and secure the power of the current management, the Financial Times reported.
The three-year instrument, proposed in the deal, would convert into a 10% stake in the company, and land the sheikh a seat on the board. The stake would come from El Corte Ingles’s treasury stock, therefore diluting the stakes of other shareholders, Ceslar argued.
Ceslar owns 10% of the department store chain, which is one of the largest retail empires in Europe, and saw revenues of €14.3 billion in 2014.
Currently only located in Spain and Portugal, El Corte Ingles’s revenues suffered in the post-2008 period, as its middle-class customer base felt the pinch of the recession and turned to cheaper alternatives.
Before the global financial crisis it had ambitions to expand into Italy, but those plans remain on hold.
Founded in 1940 by Ramon Areces, the company entered the second generation in 1989, when Isidoro Alvarez took over from his uncle. According to the Wall Street Journal, Alvarez built up a large treasury stock portfolio and resisted opening up the company to outsiders.
Alvarez’s nephew Dimas Gimeno, who became chairman in 2014, voted in favour of the Primefin deal, supported by IASA, a holding company controlled by Alvarez’s daughters. The Ramon Areces Foundation, controlled by a non-family member, also voted in favour of the deal.
The public statement made on behalf of the second-generation family members comes ahead of a meeting at the end of the month, whereby a bylaw will be passed allowing the transfer of treasury stock to Primefin.