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Baugur chief defends investor’s strategy a year on

Former Baugur chief executive Gunnar Sigurdsson has defended the Icelandic investor’s strategy a year on from its spectacular collapse.

The Icelandic investment group, founded by entrepreneur Jón Ásgeir Jóhannesson, launched an audacious assault on the UK high street over the previous decade, before falling into administration in February 2009 in the wake of the Icelandic banking collapse.

At the time of its collapse, Baugur had stakes in retailers including House of Fraser, Mosaic Fashions - then-owner of chains Oasis, Karen Millen, Coast and Warehouse - Jane Norman, All Saints and Whistles.

Sigurdsson told Drapers: “The reality has been that the businesses that we were involved with before have performed well. It’s testament to the fact they were good businesses, they had good management teams and weren’t overleveraged.”

Sigurdsson maintained that Baugur “always made a point that cash flow was strong in the business” when closing a deal.

He conceded that Baugur’s administration was “disruptive” for the Baugur-backed businesses and that the negative publicity surrounding Baugur’s collapse led to credit insurance issues at businesses that were otherwise sound.

Sigurdsson admitted that the investment house was left overstretched following the acquisition of some of its smaller investments but was unrepentant about Baugur’s intentions. “We took on more things than we should but there was always a plan. We worked the group to utilise the strength of the group. The companies bought into services as a group and benefited. Strategically we were strong but we got caught up in the storm in the markets.”

Sigurdsson added that it was possible for another investor like Baugur to be successful in UK retail in the future. He said: “There is a lot of benefit in having an investor that has that speciality and knowledge. We demonstrated that.”

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  • The 'blood on the high street' predictions did not materialise, true, but the companies were left with a restructuring on their hands and credit insurance issues to sort out. The business that are left are good ones but the mangement should have been able to focus on retailing rather than sorting out this mess.

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