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Burberry in vogue as Belgium’s richest man takes a stake

Published: 12:25 01 Mar 2017 GMT

Burberry fashion show
Burberry is on its way to becoming the cock of the walk again

Shares in Burberry Group PLC (LON:BRBY) leapt more than 5% higher in early deals on Wednesday after Belgium’s richest man revealed he has bought a stake in the trench coat maker.

Activist investor Albert Frere, worth an estimated £3.9bn, has taken a 3% interest in Burberry via his Groupe Bruxelles Lambert investment vehicle.

The near 6% rise in the share price comes after the stock posted a 4% gain late on Tuesday following reports of Frere’s interest, with shares closing at their highest level for more than two years.

The reason for the price hike is that 91-year-old Frere and GBL have a history of squeezing the most out of bosses.

Back in 2015, the investment vehicle bought a stake in sportswear giant Adidas, with shares almost doubling in the two years since.

Only last month, upmarket clothing firm Hugo Boss soared after rumours circulated that GBL had established a significant holding in the company.

Boss shares took a hit today though; with Macquarie analyst Daniele Gianera conceding that the rumoured investment from GBL now looks “less likely”.

“We think GBL’s stake build in Burberry is good news for the shares, as finally we see active investors getting engaged with the company which could unlock higher value to shareholders,” Gianera added.

Crossroads for Burberry

The backing from Frere comes at a crucial point in Burberry’s history as chief executive Christophe Bailey prepares to hand the reins over to former Celine boss Marco Gobbetti this summer.

That said, things seem to be on the up for the luxury goods market, with Burberry and others reporting signs of recovery in key markets such as China.

Last month, the group said its revenues had increased in the final quarter of 2016, which includes the key holiday season, with underlying retail revenues up 4% to £735mln.

Burberry also revealed that it is on course to deliver £20mln worth of cost savings in the coming year, before adding that more than half of its £150mln share buyback programme had been completed.

Who is Albert Frere?

The son of a scrap metal merchant, Albert Frere was born in Charleroi, Belgium in the Roaring Twenties.

His father died unexpectedly when he was still a teenager, forcing Frere to drop out of school and run the family business by himself.

A decade or so later and armed with the knowledge gained from running his father’s company, Frere began to invest in the Belgian steel industry, before selling off his sizeable investments in the 1970s.

He used this cash to set up Pargesa, a Swiss holding company he founded with Canadian investor Paul Desmarai.

It was Pargesa that took over GBL back in the early ‘80s, and the company now holds significant stakes in the likes of energy giant Total and Beefeater gin owner Pernod Ricard.

It doesn’t stop there either. Frere also heads the investment business, CPF; a media, utilities and oil empire that he’s built up on his own.

The billionaire is particularly close friends with LVMH chief executive Bernard Arnault and the two run the Chateau Cheval Blanc winery near Bordeaux together, while Frere also sits on the LVMH board as an independent director.

Shares in Burberry eased as the markets entered the afternoon, although they were still up by 2% at £17.53.

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