A $3 billion investment fund has been launched with the aim of discovering the next high street giant.
L1 Retail will search Britain, Europe and emerging markets for retailers that have the potential to become industry superstars, with a special focus on advances in analytics and logistics.
The new division of LetterOne, the international investment business founded by Mikhail Fridman, the Russian billionaire, will look for companies that offer value for money and convenience for customers, as well as health and wellbeing retailers.
Until now, LetterOne has concentrated largely on technology, including a $200 million investment in Uber, and energy, with significant interests in the North Sea. LetterOne, which also has a private equity, trading and property business, has been trying to diversify its portfolio, however. Yesterday’s announcement comes after the launch of L1 Health earlier in the year.
The investment group has signed up some of the biggest names in retail to pilot its new enterprise. The L1 Retail team, based in London, will be led by Stephan DuCharme, LetterOne’s managing partner and a former chief executive and present non-executive chairman of X5 Retail Group, Russia’s largest food retailer. Despite Mr DuCharme’s experience in Russia, the retail fund will not be investing there.
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He will be supported by a two-man advisory board, comprising John Walden, former chief executive of Home Retail Group, and Clive Humby, a co-founder of Dunnhumby, a customer insight company.
Mr Walden was key to the digital transformation of Argos while at Home Retail, which also owned Homebase, and was chief executive from 2014 until it was taken over by J Sainsbury this year. Yesterday, he said that he looked forward to building a retail portfolio “from the bottom up” and that constant changes in the market were creating opportunities for investors with “real retail vision but also the ability to drive disciplined long-term execution of strategy”.
Dunnhumby, which was created by Mr Humby alongside Edwina Dunn, transformed supermarkets’ understanding of shopping habits through data analysis and led to the creation of Tesco’s loyalty card scheme. As one of the first British businesses dedicated to analysing data to work out the spending patterns of customers, Dunnhumby, now owned by Tesco, helped it to become the UK’s largest supermarket in just over a year.
Mr Humby will bring his knowledge of data and trends to LetterOne’s investment strategy. He said that understanding this was the “key to success . . . Data is the new oil. It’s immensely valuable, but if unrefined it cannot really be used.”
Founded three years ago, LetterOne is a long-term investor that owns companies and has stakes in businesses in 31 countries. Mr Fridman said that the new division would use past experience to take advantage of consumer trends and back a new wave of high street brands.
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“As entrepreneurs we have, over 20 years, built the largest food retailer in Russia,” he said. “Our aim is to leverage our track record to invest in, and build, the next generation of retailers internationally.
“Current trends in global consumer markets and ongoing technological disruptions represent a unique opportunity to build hybrid platforms for growth and value creation in the retail space.”