Majid al-Futtaim (MAF) Holding purchased a 25 per cent minority stake from French retailer Carrefour Group in its hypermarket business for €530m (AED2.5bn), it announced on 23 May. Under the agreement, MAF will own all of Majid al-Futtaim Hypermarkets’ shares.
MAF and Carrefour Group also renewed their franchise partnership until 2025, which will see it develop new food retail formats and further expand its presence in the region.
The group plans to issue a dollar-denominated, hybrid bond that will not exceed 15 per cent of its capitalisation to finance the acquisition. Hybrid bonds combine characteristics of both equity and debt. They have typically been used by banks to raise capital in the region.
MAF is planning a series of fixed-income investor meetings in the UAE, Asia and Europe starting on 26 May to sell the notes, rated BB+ by Standard & Poor’s (S&P) and Fitch Ratings.
S&P anticipated that MAF Group will generate about AED2bn of operating cash flow in 2012, and up to AED3.4bn of capital expenditure, it said in a report published in June.
MAF operates 50 hypermarkets and 44 supermarkets under the Carrefour brand in several countries in the Middle East, North Africa and Central Asia.
The group is in talks with Egypt’s Al-Mansour Group to acquire the Metro supermarket chain and discount grocery store Kheir Zaman.