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Last Updated: Tuesday, 3 May, 2005, 15:00 GMT 16:00 UK
Clothing firm to float in Iceland
Model wearing Coast red dress
Mosaic wants to expand globally
UK clothing firm Mosaic Fashions plans to become the first foreign company to list on Iceland's stock exchange as it looks to raise cash for future growth.

The company is controlled by Icelandic retailer Baugur and was formed in 2004 by the merger of fashion labels Oasis Stores and Karen Millen.

Mosaic, which also owns the Coast and Whistles brands, wants to sell 40m ($75m) of new shares to fund expansion.

Following the flotation, Mosaic will look to sell 50m of bonds.

Mature market

The cash will be used to pay off debt, freeing up revenue to finance foreign expansion.

The main recipient of the money will be the Karen Millen brand, said Mosaic chief executive Derek Lovelock.

Iceland Stock Exchange
The exchange was set up in 1985
The first company listed in 1991
At its peak in 1999 there were 75 listed companies
By end of 2004, that number had slipped to 34
Stock exchange's total market value is 1,337bn Icelandic kronur ($21bn)
Biggest company is Kaupthing Bank, worth 360bn kronur
Smallest is Slaturfelag Sudurlands, worth 212m kronur
Trading has always been electronic
Market opens for trading between 1000 and 1600

"British retail is one of the most competitive markets in the world," Mr Lovelock said, adding that brands which are successful in the UK stand a good chance of making it abroad.

Mr Lovelock said that one of the main reasons for going to Iceland was the size of the share sale and the fact that in the UK it would be seen as negligible.

In Iceland, Mosaic will be the only listed retailer and is set to become the stock exchange's eighth-biggest company, with a market value of close to 300m.

"Iceland has a mature, liquid market with investors who have the experience and expertise to support companies in the execution of their growth strategies and to expand internationally," Mr Lovelock explained from Reykjavik.

Set for growth

The Iceland Stock Exchange (ISE) has posted stellar growth over the past two years - it is one of the world's top 10 performing stock indexes and has almost tripled in value.

Analysts say, however, that growth will continue but not at its current pace. They point to the fact that the number of companies listing on the ISE has dropped in recent years.

Baugur for example turned back into a private company in 2003.

Following the flotation, Baugur's holding in Mosaic will decline to 36% from 40%.

Over the past three years, Mosaic has seen consistent sales growth. In the 2004-2005 financial year, the company had total sales of 355.6m.

The company has 600 stores, most of them in the UK and Ireland, and has about 5,400 staff.

The major shareholders in Mosaic are Baugur, Mosaic's management, Kaupthing Bank and the founders of the Karen Millen brand, Kevin Stanford and Karen Millen.

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