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£430m added toBaugur cash pot

Baugur Group chief executive Gunnar Sigurdsson is back on the retail acquisition trail after the investment firm added £430 million to its retail war chest, following the divestment of its media, technology and financial services arm.

Sigurdsson said the £430m would build on the Icelandic group’s existing cash base for retail and fashion investments and that it would put all its future focus on the retail sector. He added that the funds would enable the group to take advantage of investment opportunities as company valuations slipped further in the current climate.

He said: “We have to be very selective in these times, but there are definitely brands out there with great potential.”

Sigurdsson added that Baugur would continue to invest in smaller start-up fashion companies such as its investment in designer label Matthew Williamson. He said: “We are very keen to see the British fashion industry grow.”

Baugur’s retail investments include Mosaic Fashions, which owns Karen Millen, Warehouse, Oasis, Principles, Shoe Studio and Coast. It also has interests in department store chain House of Fraser, plus retailers Whistles, Jane Norman, MK One and AllSaints. Its last major retail acquisition was House of Fraser in 2006.

Sigurdsson said the fund would also be used to support Baugur’s existing retail investments with overseas growth ambitions. Mosaic Fashions has already begun opening stores in the US, where it believes there is huge growth potential for the likes of its occasionwear brand Coast. He stressed there were no plans to divest of any investments.

Separately, Sigurdsson said trading was “slightly more challenging in the middle market” but added that niche or premium chains were doing well. “All Saints is flying,” he said. “We have prepared our businesses for not a lot of growth this year and they are well placed for the tough conditions.”
Baugur made a £40m indicative offer for menswear chain Moss Bros earlier this year. It is in the process of completing due diligence, but family shareholders believe the offer significantly undervalues the business. Sigurdsson said due diligence was continuing.

The group has also appointed director of legal and operations Andrew Lobb to the executive board as managing director of legal and operations.

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