Baugur, the Icelandic investment group, has raised more than £100 million by selling its shares in Booker, the rapidly growing cash-and-carry business.

The 31.4 per cent stake was placed with a number of institutional investors, including the private equity group Kaupthing Capital Partners.

The deal sparked fresh speculation about the health of Baugur’s finances, given the turmoil on debt markets and the group’s recent decisions to sell MK One, its struggling fashion chain, and Julian Graves, the UK’s largest seller of natural foods.

However, Gunnar Sigurdsson, the chief executive of Baugur, insisted that the disposal was completely in line with the group’s policy to focus on investments in retailing and to move away from non-core areas such as wholesaling. Mr Sigurdsson said that Baugur was very comfortable with the health of its UK portfolio despite the sharp fall in the value of its stakes in companies such as Woolworths and Debenhams over the past year.

Baugur owns minority stakes in several high street chains as well as owning outright a number of businesses, such as Hamleys, the toys retailer, Goldsmiths, the jeweller, and Iceland, the supermarket chain.

Mr Sigurdsson said: “We are very happy with the state of the portfolio. If I look at the overall picture, I feel very good about it and very pleased about the performance under the current conditions. We have businesses like our jewellery business, Hamleys and our clothing businesses that are trading extremely well.”

Baugur acquired Booker with the Iceland supermarket chain and Woodward Foodservice when it bought the Big Food Group for £326 million in 2005.

Booker was floated back on the stock market last year and is valued at £324 million. The company declared a maiden dividend in May after a 27 per cent rise in full-year pre-tax profits.

Mr Sigurdsson insisted that Baugur’s decision to sell out of Booker has not been triggered by a need to pay off debt. He said that it was simply an opportunity to crystallise the value of the stake and focus more exclusively on retailing.

He said: “In 2005 Booker was a long-term turnaround project, it was a three-year project and it has gone pretty much according to plan. Last year was the first step in our planned exit, when the business went back on the stock market.

“We signed a lock-up that ran until June this year. We feel it’s a logical point for us to exit and crystallise the gain we have had on the whole project.”

Baugur’s exit was one of a series of deals designed to increase the number of blue-chip institutional investors on Booker’s shareholder register before its move from AIM to the main stock market early next spring.

Sir Tom Hunter, the retail entrepreneur, also sold part of his 5.8 per cent stake in Booker to leave him with a 2.2 per cent holding. Kaupthing Capital Partners, the Icelandic private equity group, took a 22 per cent stake.

Charles Wilson, Booker’s chief executive, said that the changes to the investor base would help to facilitate the move to the main market.

Mr Wilson added: “Baugur is leaving our shareholder register, a result of their future focus on retail rather than wholesale investments, and we would like to thank them for the support they have given Booker over the past few years.”

Mr Wilson increased his own stake in the Booker business to 8.3 per cent by spending £400,000 on acquiring two million shares at 22p.

Shopping basket

What Baugur owns in the UK

Fashion
Mosaic Fashions (Karen Millen, Oasis, Warehouse, Shoe Studio Group, Principles, Coast, Odille), Whistles, Jane Norman, MK One, All Saints

Food
Iceland, Booker, Julian Graves, Whittard of Chelsea

Department stores
House of Fraser

Speciality
Aurum (Goldsmiths, Mappin & Webb, Watches of Switzerland), Hamleys, Wyevale Garden Centres

Listed investments
Debenhams (6.7 per cent), Moss Bros (29.2 per cent), French Connection (20.9 per cent), Woolworths (12.4 per cent)

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