A wealthy Saudi family is buying up failing Children’s Place

The Al-Rajhis are said to be Saudi Arabia’s richest non-royals and trace their fortune to Al Rajhi Bank, which was founded by the family’s nonagenarian patriarch and is now the kingdom’s second-biggest company, behind oil giant Aramco. Mithaq, run by a son of a less-prominent branch, invests some of the family’s wealth.

Mithaq’s reported holdings of public stocks, valued at about $200 million by S&P Capital IQ, are an eclectic mix: a British litigation-finance firm, an Israeli data-intelligence firm, a Chinese tour-guide company, an Australian goat-milk producer, an advertising-technology company that just delisted from Nasdaq.

The Al-Rajhis’ partner in Mithaq, Asif Seemab, told Bloomberg in 2022 that “other than Shariah compliance” — which prohibits collecting or paying interest on debt — “we are country-agnostic and sector-agnostic.” Executives who’ve engaged with the firm describe a Buffettesque buy-and-hold approach, with occasionally sharper elbows. (Mithaq is currently waging a hostile takeover battle at a small Canadian conglomerate.)

I wrote last week, in a different story about a different wealthy family making a different head-scratching investment, that “there’s a lot of money in the world, some of it in strange places.” There are twice as many global billionaires as there were in 2016, according to Forbes, and they are increasingly managing their own money, rather than doling it out to investment professionals. And sometimes the heart wants what it wants.

That said, Mithaq’s tactics here are high-risk, and might actually hasten The Children’s Place’s downfall, zeroing out the value of the stock it was so eager to own.

The Children’s Place’s biggest problem is a $445 million loan backed by its inventory, a common way that retailers finance themselves. The fine print of that loan requires it to be repaid if anyone acquires at least 25% of the company’s stock, an event that The Children’s Place, which has just $45 million of cash on hand, can’t afford. On paper, the company is now insolvent, and Mithaq’s shares are worthless.

That said, Mithaq clearly, somewhat bafflingly, likes this company and is prepared to put money into it. The Children’s Place’s lenders are in control now, and they might prefer dealing with a single large shareholder willing to bankroll a turnaround.

Saudi Arabia and the Emirates are in some ways giant family offices themselves, but beneath their ruling family’s billions are a surprising number of private fortunes — the Al-Rajhis in banking, the Al-Nahdis in pharmaceuticals, the Olayans in construction — that are now being plowed into glitzy, go-anywhere deals.