EQUITY ISSUE EXPECTED
New Look drags Brait down
New Look was the ugly stain in Brait’s trading update for the quarter to December 2016, as the UK clothing retailer’s valuation fell R10bn following a 42% drop in the previous quarter. "The UK and European apparel and footwear sectors continued to face a challenging, promotion-led market with reduced footfall during the 13 weeks ended 24 December 2016 (Q3)," said Brait. It paid $1.2bn for New Look in 2015. Brait revised New Look’s net asset value (NAV) to R8.7bn, from R18.7bn in the previous quarter. The business now comprises 17% of Brait’s NAV and has been replaced by Virgin Active as the group’s largest holding. A recent rally in New Look bonds and a fall in Brait’s share price suggested that the market might be anticipating an equity issue to refinance New Look’s debt, which stood at about £1bn, said Brad Preston, portfolio manager at Mergence Investment Managers.