UK sportswear company Frasers Group has bought a £75mn stake — almost a fifth — in online electrical goods retailer AO World from Odey Asset Management.
Odey Asset Management offloaded its stake to Frasers on Friday, according to people familiar with the situation, after the Financial Times reported that Crispin Odey, the hedge fund manager, was facing allegations of sexual assault or harassment from 13 women.
Frasers, formerly Sports Direct and majority owned by business tycoon Mike Ashley, has been snapping up shares in other retailers over the years, most recently in fast-fashion company Asos and luxury group Hugo Boss. It also invested in UK clothing retailer N Brown and luxury brand Mulberry.
AO shares rose 7 per cent to 74.9p by lunchtime in London, while those of Frasers were steady at 689p after the company confirmed on Monday it had bought 109.4mn shares at 68p.
The investment will “help us to drive growth in our bulk equipment and homeware ranges”, according to Frasers chief executive Michael Murray. It comes after two years of talks, the two companies said.
John Roberts, the founder and chief executive of AO, said the partnership had “significant potential” and it was a “fantastic endorsement for our business”.
“As we continue to build on our strategy of pivoting to profitable growth, it will be hugely exciting to have a range of compelling strategic opportunities to explore together,” he added.
The move confounded one analyst. Nick Bubb, an independent retail analyst, described the move as “bizarre”.
Bradley Hughes, a consumer analyst at Shore Capital, said: “This twist in the tale follows on from speculation in July of last year that Frasers tried to gatecrash its £40mn fundraising call and in our view marks a solid vote of confidence in AO’s pivot to profitability story.”
Frasers told analysts that its intention was to be “simply a shareholder but offering a gateway to partner on the fulfilment of two-man deliveries”, Hughes added.
The company owns Sofa.com and Evans Cycles and stocks gym equipment, and it also sells bulky domestic appliances through Studio Retail. It requires two-person delivery teams on some Evans bicycle deliveries.
A law firm representing Odey has said allegations made against him were “strenuously disputed”. Odey said last week that “none of the allegations have been stood up in a courtroom or an investigation”.
