Tesco has a new addition to its list of recent woes as its biggest investor, Government Pension Fund Global, has sold a large portion of its shares in the chain.
The Norwegian group sold 27m shares in Tesco last week, bringing its total stake in the supermarket chain below 6%. This continues the pattern of GPFG’s owner, Norges Bank Investment Management, which has sold 83.5m shares in Tesco since August.
A lack of faith in Tesco is certainly understandable. In November it emerged that Tesco could be forced to pay out $12m to US shareholders, following the accounting scandal of 2014 which led to a drastic restructuring in management, as well as an investigation for fraud.
In October Tesco Boss Dave Lewis, who took over the company following the scandal, came out to defend the company when it posted a £425m drop in profits. He claimed that “every important part of Tesco has been or is being transformed operationally, culturally or financially” and highlighted the rise in like-for-like sales as evidence that his changes were working.
However, businesses under the Tesco umbrella are faring no better: Dobbies, Giraffe, Harris & Hoole and Nutricentre all posted losses this year, whilst the One Stop convenience store chain saw its profits reduced by half.
Though the worst may well be over for Tesco, it remains to be seen whether its key investors will be willing to wait out the recovery period.