The Thing Is: Baugur

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The Independent Online

The image is rather romantic: a mysterious Icelandic businessman, building his business out of nothing and marching into the UK high street like a Viking raider.

Jon Asgeir Johannesson, the chief executive of Baugur, has caused a stir in the UK retail sector, particularly after his extravagant £59m bid for toy store Hamleys that was sealed last week. There were also extraordinary allegations made on Friday that he tried to use company funds to pay for escort girls - claims dismissed by a Baugur spokesman.

Mr Johannesson holds stakes in Big Food Group, the company that owns Iceland, Somerfield and the House of Fraser. But he launched his UK career by buying up a 20 per cent stake in Arcadia - the owner of Top Shop, Miss Selfridge and Burton - when it was a lowly rated company. His choice was astute and when the colourful UK retail entrepreneur Philip Green bought Arcadia in September last year, Baugur made nearly £70m. As part of the deal, Mr Johannesson had intended to buy some brands, including Top Shop. Staff were dazzled by the confident young man about to take control. "He was quite popular with the ladies," remembers one insider. "He's not the back end of a bus."

But his healthy profit was marred when police raided Baugur's offices as part of a fraud investigation. Mr Johannesson gave detailed rebuttals to the allegations. However, the news forced Mr Green to launch a solo bid, following a "robust" conversation between the two, saidone insider.

More startling allegations came from the Icelandic Prime Minister David Oddsson, who alleged Mr Johannesson had wanted to bribe him - a claim that was also fiercely denied.

Friends of the businessmen argue that in an egalitarian country like Iceland, Mr Johannesson's flamboyant style and new wealth is frowned upon. The suggestion was made that the Icelandic PM could have been trying to score points ahead of a general election.

But Mr Johannesson's exploits are all the more remarkable because of his background. Iceland is a country with a high standard of living, but it only has a population of just under 300,000 and its GDP is $8bn (£5bn). This makes Baugur's ISK52bn (£420m) turnover all the more extraordinary.

He made his first millions by building control in the Icelandic retail market, where he now owns around 45 per cent of food retailing and 30 per cent of the clothing market, or around 70 stores. The company also has large interests in Scandinavia and, less successfully, the US.

It is in the UK and Scandinavia where he wants to spread his wings, and he has already made another profit on his minority stakes in the UK retailers. Britain has proved lucrative for him. And like his Nordic forebears, he'll be back.