J Sainsbury shares fell sharply on Wednesday after its biggest shareholder, Qatar’s sovereign wealth fund, moved to reduce its long-standing holding in the UK supermarket.
The stock was the worst performer on the FTSE 100 in early trading, down 14.40 pence, or 4.4%, at 311.60 pence.
Despite the drop, shares remain up 18% so far this year.
A major selldown by the largest shareholder
Qatar’s Investment Authority plans to sell roughly 4% of Sainsbury’s shares through a secondary offering, marking one of its most significant stake reductions in recent years.
The shares are being offered at 317.6 pence each, according to the term sheet seen by investors.
JP Morgan Securities said on Tuesday that it was placing up to 83.6 million shares on behalf of Qatar Holdings through a bookbuild.
A further 14 million shares are being placed with institutional investors to hedge a derivative transaction, though Qatar won’t receive proceeds from that portion.
Based on Tuesday’s closing price of 326 pence, the shares being placed were worth about 317.85 million pounds.
Qatar’s fund intends to sell shares worth around 265.5 million pounds, reducing its stake to 6.82% from 10.48%, according to LSEG data.
This shift means the investor will drop from Sainsbury’s largest shareholder to its fourth-largest.
No explanation was given for the sale, and neither the fund nor Sainsbury responded to requests for comment.
A long relationship with the grocer
The Qatari fund first invested in Sainsbury in 2007, raising its stake to 25% that year as it considered an £11 billion takeover bid, which was later abandoned.
The holding has gradually been reduced since 2021 as the investor trimmed its UK exposure.
Last October, the sovereign wealth fund sold its 5% stake, amounting to £306 million, only a week after Sainsbury’s chief executive warned that fiscal uncertainty was weighing on consumer spending.
Strong performance but sector pressures remain
The sell-down comes despite Sainsbury’s improving operational picture.
The retailer has lifted its UK grocery market share to 15.3%, the highest in nearly a decade, and last month raised its full-year retail underlying operating profit forecast to more than £1 billion for the year to March 2026.
The company also reported a 10% rise in first-half underlying pretax profit to £340 million, while retail sales excluding fuel climbed 4.8% to £15.58 billion.
Total group revenue rose to £17.58 billion from £17.11 billion a year earlier.
Analysts say Sainsbury’s renewed focus on value and its investment in groceries have boosted performance.
“Sainsbury’s value proposition is clearly paying dividends,” said Richard Hunter of Interactive Investor following last month’s results update.
He added, however, that rising employment costs and persistent food inflation remain sector-wide challenges, tempering the outlook for UK supermarkets.
Sainsbury’s market capitalisation stood at £7.44 billion as of Tuesday’s close.
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