M1 Group and ex Goldman Sachs's turn All Saints

After flirting with US investment specialists Goode Partners and Och Ziff, fashion chain All Saints is expected to secure its long-term future this week by unveiling a funding deal with a Lebanese investment group. As published by main British media

today, the consortium made up of Beirut-based M1 Group and ex-Goldman Sachs banker Richard Sharp hopes to gain joint control of the high street retailer in return for a capital injection of about £100 million, according to reports.

The Spittafields based retailer would then prefer this joint venture as its new journey partner rather than teaming up with Och Ziff, which already owns a 25 per cent stake in the UK discount retailer Peacocks.
The family-owned M1 group spans many countries and industries, including aircraft financing, fashion and property. It acquired French retailer Façonnable in 2007 and it is expected there could be synergies between the two fashion companies. M1 Group was co-founded in the 1960s by Najib Mikati, 55, a billionaire who is the Lebanese prime minister-designate and a shareholder in M1 alongside Taha Mikati.

Mr Sharp is the former head of Goldman Sachs’s European private equity arm. He was one of four city figures recruited last summer by George Osborne, the chancellor of the exchequer, to join a “red team” of experts to consult on options for reducing the public deficit, published the Financial Times.

Talks are ongoing but it is thought that a deal could be announced early this week in a move that would recapitalise the business and help pay for international expansion. As part of the plans, Lloyds Banking Group is expected to increase an existing working capital facility for the group to around £50m from its current £28.5m.

Asked about the state of its seek for a financial partner, Stephen Craig, the chief executive of AllSaints, said last week: "Lloyds remains supportive and we are confident that the chain's best days are ahead of it," but declined to comment on the sale process. Nevertheless, his comments have been interpreted by media as a positive sign and an attempt to nip in the bud speculation about the retailer, following reports earlier this month that All Saints had a pressing need for fresh capital to safeguard its future.

The accountancy firm Ernst & Young was hired to find buyers for stakes in All Saints after the collapsed Icelandic banks Kaupthing and Glitnir decided to sell their shareholdings in the retailer. Lloyds Banking Group provides All Saints with its working capital facility.

For the year to 31 January 2010, All Saints more than doubled pre-tax profits to £10.7m, on sales up 46 per cent to £132.9m. Its earnings before interest, taxation, depreciation and amortisation rose by 90 per cent to £23.6m over the period.

Image: All Saints