Funding crisis at Dawnay Day could lead to sale of Wolseley restaurant

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The Independent Online

The financial services conglomerate Dawnay Day has called in administrators from Ernst & Young to carry out an emergency review of several of its businesses after failing to raise the funds it needs to keep the company afloat.

The group – which operates in the property investment, fund management and private equity arenas, and whose investments include the clothes retailer Austin Reed and London restaurant The Wolseley – has appointed a group led by the E&Y veteran Alan Bloom, the administrator who oversaw the Railtrack file following its collapse seven years ago.

Despite carrying out a £750m refinancing at the start of the year, the worsening conditions in the credit markets have left the group in need of more capital, which it has struggled to secure.

The first signs of the group's difficulties emerged last week when it sold its 20 per cent stake in F&C Asset Management, realising an £80m loss. Days earlier, the company's chairman, Guy Naggar, had been adding to Dawnay's stake in the fund management business. The eventual sell-off sent F&C shares down 28 per cent in a day.

It also emerged last week that Dawnay Day was selling its 50 per cent stake in its broker, Dawnay Day Capital Markets, back to its management – a deal which is expected to complete today.

Last month, Dawnay, Day Treveria – a London-listed German retail property fund, in which Dawnay Day has a stake – announced it was conducting a strategic review, which could result in a sale of the business, after its shares fell to less than 60 per cent of the firm's net asset value. Although the announcement sparked a bounce in the stock, the shares have since fallen back to an even larger discount.

Dawnay Day, founded in 1928, has been under its current ownership since the early 1980s. Mr Naggar and its chief executive, Peter Klimt, own most of the company. Both were last year estimated to have personal fortunes to the value of £235m.

The pair have set up dozens of businesses, and are both directors on the boards of more than 250 companies, according to records at Companies House.

The group has expanded rapidly over the past few years, recently investing £127m into housing in Harlem, New York. It had planned to build a US property arm worth more than £5bn.