Mike Ashley's Frasers eyes up AO World - report

Mike Ashley’s Frasers Group is reportedly considered backing the £40m fundraising launched last week by white goods specialist AO World.

The Mail on Sunday, quoting unnamed City sources, said Frasers had been "trying to get involved" in the fundraising by either underwriting it or buying shares.

The sources added that Frasers, which owns department store chain House of Fraser, Sports Direct, Game and Sofa.com, among others, is seeking a relationship with AO World, with a possible long-term goal of eventually taking the online retailer over.

Frasers has yet to comment on the report.

AO World, which issued its third profit warning in three months in April, saw its share price slump last week after The Sunday Times reported that a credit insurer had cut its cover.

The retailer enjoyed strong demand during lockdown, when bricks and mortar rivals were unable to trade, but the cost of living crisis has since seen consumers cut back on big ticket items. It has also been forced to close its struggling business in Germany.

On Thursday, AO announced plans to raise about £40m in new capital, which it said would be used to bolster its balance sheet, boost liquidity and "provide flexibility to capitalise on market opportunities".

As at 1115 BST, shares in AO World were ahead 5% at 45.28p, while Frasers was largely flat at 697.0p.

Ashley is well known for building up stakes in businesses before taking full control, and acquired House of Fraser four years ago after building an 11% holding.

Frasers - formerly called Sports Direct - currently holds around 4.9% of Hugo Boss and a further 26% of stock indirectly via put options after first buying into the German brand in 2020.

Ashley owns 69% of Frasers. He stepped down as chief executive last month, to be succeeded by Michael Murray, his son-in-law, but remains an executive director.