DUBAI/LONDON - U.S private equity firm Apollo Global Management Inc is in talks to buy a minority stake in the Middle East, North Africa and central Asia Starbucks franchise operated by Kuwait's AlShaya Group, three sources close to the matter said.

Dubbed "Project Emerald", according to two of the people, the privately owned retailer is looking to sell a minority stake of about 30% in the business, Reuters reported previously.

Saudi Arabia's sovereign wealth fund, the Public Investment Fund (PIF), which has previously been shortlisted to buy the stake, is also still involved in the talks, one of the people and a third one said.

The Starbucks unit runs around 2,000 outlets in 13 countries, across the Middle East and North Africa, Kazakhstan and Azerbaijan. It was valued at between $4 billion and $5 billion in 2022, Reuters reported previously, before it exited Russia.

Starbucks said in January that the Israel-Hamas war has hurt its business in the region as it missed market expectations for first-quarter results.

It said sales were significantly impacted due to the conflict, in the Middle East and in the U.S., as some consumers launched protests and boycott campaigns asking the company to take a stance on the issue. However it added it remained committed to its growth ambitions in its international segment.

In the wake of the boycotts, Starbucks in October said it was a non-political organisation and dismissed rumours that it had provided support to the Israeli government or army.

A deal would widen the investor base of the privately-owned business held by the Alshaya family since 1999. Some of the Middle East's biggest private companies have increasingly been looking to bring in outside investors through listings or strategic stake sales.

In 2022, AlShaya pulled out of Russia and shuttered 130 stores to comply with Starbucks' decision to withdraw from the sanctioned country after its war with the Ukraine.

Established in 1890, Alshaya is one of the biggest retail operators in the region with rights to operate businesses of popular Western brands including The Cheesecake Factory, Shake Shack and Pottery Barn.

(Reporting by Hadeel Al Sayegh in Dubai, Andres Gonzalez Estebaran and Pablo Mayo Cerqueiro in London. Editing by Anousha Sakoui and David Evans)