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Baugur buys Jane Norman for £117m

Susie Mesure

Baugur, the Icelandic investor, made its first acquisition yesterday since its chief executive was charged with fraud, buying the fashion retailer Jane Norman in a deal worth £117.4m.

Saj Shah, the chief executive of Jane Norman, is understood to have made about £10m from the sale but he plans to reinvest half of that in return for a 10 per cent equity stake. He plans to continue in the role. Baugur has teamed up with Kaupthing, Iceland's biggest bank, which has worked with it several deals, including Big Food Group, Mosaic and Shoe Studio.

Baugur is investing £18.5m for a 39.5 per cent stake, while Kaupthing will take 32.5 per cent for £15.3m. Kaupthing has also underwritten £70m of senior and mezzanine debt financing.

The Icelanders are buying Jane Norman from Graphite Capital, which backed a management buyout for £70m from the group's founder, Norman Freed, two years ago. Graphite, which invested £20m two years ago, said it had made a 2.9 times return on its investment.

Mr Shah, who joined Jane Norman's finance department in 1976, said he had no qualms about the fraud charges facing Jon Asgeir Johannesson, Baugur's chief executive. "If we had any concerns we wouldn't have gone ahead with this deal."

Mr Johannesson and five close associates, including his father and sister, have denied all 40 charges in the indictment. His lawyer has yet to publish the details of the charges, which are thought to include embezzlement and tax evasion.

Baugur was already in pole position to acquire Jane Norman when Icelandic police charged the six men.

Banking sources said the Icelandic group behind Hamleys, Karen Millen and the Iceland supermarket chain, would not chase any more publicly quoted targets while Mr Johannesson fought to clear his name. Baugur was elbowed out of a consortium bidding £1bn bid for Somerfield earlier this month.

Mr Shah met Baugur through his retail contacts at Oasis and Warehouse, womenswear retailers Baugur has stakes in. In the two years under Graphite's ownership, Jane Norman has opened 48 new outlets. Mr Shah said there were no plans to merge Jane Norman with any of Baugur's other retail investments.

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