The Sports Direct founder Mike Ashley has been quietly building a stake in the UK’s largest listed residential landlord, in a departure from his usual focus on retail.
Grainger announced in May that Ashley now has a stake of more than 4% in the company.
Ashley began building his acquisition through a spread bet in January, when he bought the equivalent of 3.1% of the firm. At the end of April, he increased this to just under 4.2%, worth about £48m.
A spread bet is a derivative position that allows an investor to gamble on a company’s share price. Although the investor doesn’t physically hold the shares, large bets like Ashley’s are regarded as creating “economic exposure” to a company, and must be disclosed under stock market rules. They require less capital than a traditional investment, and are exempt from capital gains tax and stamp duty.
Ashley, a former squash coach, is known as being fiercely competitive and taking an active role in his investments. He built Sports Direct into one of the UK’s largest retailers by aggressively undercutting rivals, and although he stepped down four years ago as chief executive of Frasers Group, the retailer’s parent company, he retains a 73% stake. He has also been at the centre of a boardroom battle over Debenhams Group, of which Frasers owns almost 30%.
In an interview with the Financial Times in May, Ashley admitted to being behind covert footage that led to Peter Cowgill, then executive chair of rival JD Sports, losing his job in 2022. “He shouldn’t have been in the car park and maybe I shouldn’t have been in the bushes,” he said.
In contrast to the drama of retail, Grainger is regarded as a stable bet. The company, which owns and manages more than 11,000 homes, reported in May that net rental income had increased 7.8% to £66.1m in the six months to the end of March. However, shares have fallen more than 13% since January.
“This is [Ashley] personally taking a bet in Grainger that the shares are cheap,” said James Carswell, real estate analyst at Peel Hunt. “If you own Grainger, you’re well positioned to benefit from rising rents and rising prices.”
“Grainger is out of favour with investors,” added Tim Leckie, real estate analyst at Panmure Liberum. “However, this is precisely when value can be found and Grainger’s fundamentals are attractive.”
Grainger and Frasers Group did not comment.
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