By  on August 28, 2007

LONDON — Less than 20 years ago, the Icelandic company that now calls itself Baugur Group was a single food store that revolutionized the island's retailing with its discount pricing policy. Today, it's a major player on the British retail and fashion scenes and increasingly has its sights set on the U.S. Last month the group snapped up an 8.1 percent stake in Saks Fifth Avenue, making it the department store retailer's second-largest shareholder.

With stakes in brands including PPQ, All Saints and the department store chain House of Fraser, Baugur, which also has its fingers in Northern European property, media and supermarket companies, last month made its first move in the U.S., taking an 8.1 percent stake in Saks Fifth Avenue and becoming its second-largest investor.

So what's next for a company that few outside Northern Europe have even heard of?

Baugur is something of an anomaly in the investment community: It's private, family owned and willing to take minority stakes in companies and work alongside their existing management teams for the long haul. It doesn't aim to bail out of investments in the medium term.

"We're a retail-focused investor looking to build brands with potential," said Gunnar Sigurdsson, Baugur's chief executive, in a telephone interview from Reykjavik, Iceland. "We're not passive investors, and when we take a stake in a company, we're not looking for the door. We take a long-term view."

Richard Hyman of Verdict Research, the London-based retail consultancy, said: "Baugur behaves like a private equity house, but it operates on a different time scale. It's also been very astute in the timing of its investments, and has taken full advantage of the bull market."

Baugur currently has majority, minority and 50 percent stakes in more than 20 retail-based companies of varying profiles and sizes worldwide. Its portfolio includes 3,900 stores in 35 countries. Sigurdsson declined to provide any figures for Baugur's annual turnover, but said sales of all the companies in the Baugur portfolio are 10 billion pounds, or $20 billion at current exchange.

The Icelandic company first broke into the U.K. retail market in 2003 with the purchase of Hamleys, the toy store with a flagship on Regent Street, and Oasis, the high street fashion chain. Today, its U.K. retail investments continue to be in the middle to upper end of the market, and include Goldsmiths, the high street jeweler; Mappin & Webb, the luxury watch and fine jewelry retailer; Mosaic Fashions, the group that owns high street chains Karen Millen, Whistles and Coast, and House of Fraser, the department store. On Monday, one of Baugur's investments, the designer Matthew Williamson, revealed a new investor, Marvin Traub's TSM Capital, with Baugur remaining a shareholder.

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