Sports Direct founder nets $1.8 bln in share float

British retail entrepreneur Mike Ashley netted £929 million from the initial public share offer in Sports Direct yesterday, the discount retailer he founded in 1982 as a single shop.

Sports Direct, which runs the Sports World and Lillywhites chains, said it had placed £309.6 million of Ashley's shares with investors at 300 pence apiece, near the top of its forecast price range of 250 pence to 310 pence.

At 1000 GMT the shares had slipped to 293 pence, broadly in line with a 2.3 per cent fall on the UK's midcap index and giving the firm a market value of £2.1 billion.

Analysts said Sports Direct had done well to sell shares towards the top of its forecast range, amid signs of a slowdown in consumer spending growth and a weak share performance of the last big retail IPO, department stores group Debenhams.

"Mike Ashley's built a really successful business and revolutionised the sports retail market," said Henk Potts, an equity strategist at Barclays Stockbrokers. "It's the one area where the big supermarket groups haven't really been able to make inroads because he's been so aggressive on price.

"The market is perhaps just a little concerned whether, as the industry matures and becomes even more competitive, it (Sports Direct) can increase its strong growth profile."

Sports Direct said the placing was 2.7 times subscribed at the offer price and that Ashley had sold a 43 per cent stake in the business.

He has an option to sell up to a further 46 million shares, in which case his proceeds would rise to about £1.07 billion.

But even if this option is exercised Mr Ashley will retain a majority stake in the business and has committed, subject to certain exceptions, not to sell any further shares for two years.

Ashley is executive deputy chairman of Sports Direct, which runs 465 shops and owns brands such as Dunlop, Lonsdale and Slazenger. In the year to April 2006, the group made earnings before interest, tax, depreciation and amortisation of £145.1 million on revenue of £1.189 billion.

The reclusive Ashley has said he wanted to float the business to help drive its expansion, particularly internationally, but has been characteristically quiet about what he plans to do with the proceeds of the share sale.

Merrill Lynch was global coordinator, bookrunner and sponsor to the IPO, while Citigroup and Credit Suisse were co-lead managers.