Fidelity refuses to back Singh's £700m buyout of New Look chain

The largest institutional investor in New Look yesterday lodged a protest at Tom Singh's £700m takeover bid by abstaining from the vote that ended the fashion retailer's turbulent six years on the stock market.

The largest institutional investor in New Look yesterday lodged a protest at Tom Singh's £700m takeover bid by abstaining from the vote that ended the fashion retailer's turbulent six years on the stock market.

Fidelity, the fund manager that hit the headlines last year for spearheading a campaign to oust Carlton's Michael Green, declined to vote its 7.36 per cent stake in New Look in favour of the deal. Although one in five investors abstained from backing the bid, partly reflecting the number of hedge funds that hold the stock, 99.9 per cent of the votes by value supported Mr Singh's move.

His 348p-a-share offer was backed by the private equity firms Permira and Apax Partners, which will each have 30 per cent of the privatised group. Mr Singh, who founded New Look in 1969, will own 23 per cent after cashing in shares worth £100m, while management, led by Phil Wrigley, the managing director, will hold 8 per cent.

Martin Clarke, a partner at Permira, said the group would look at broadening its core teenybopper appeal by expanding its clothing and accessories ranges. It would decide whether to roll out menswear across its estate within the next few months, and would also consider launching a separate children's clothing line, he said.

The deal marks a return to New Look for Mr Clarke, who led a previous leveraged buyout of the retailer for Prudential Venture Managers, his former employer, in January 1996. It also earns him a paper profit of almost £600,000, rewarding him for retaining his stake in the group when it floated in June 1998.

Steven Sunnucks, New Look's chief executive, will leave the group in early April following completion of the deal. He will pocket about £7.5m, which includes £6.8m from stock options. He will join Belinda Earl, the former chief executive of Debenhams, and Stuart Rose, the former head of Arcadia, as one of a spiralling number of unemployed retail executives.

Mr Clarke said taking the group private meant that Trinitybrook, Mr Singh's consortium, would be able to focus on "profit and cash rather than sales". New Look's stock has see-sawed depending on how its like-for-like sales have fared, causing its shares to hit a record low of 50p in 2001.

He declined to comment on Fidelity's abstention, as did the fund manager, but said of the offer: "People are looking at a consumer environment that is a bit more uncertain."

Trinitybrook would consider rebranding the group's French arm, which trades as MIM, under the New Look banner, he said, adding that expanding into other continental European countries was a "long term option". Spain would be the most likely contender, Mr Clarke said.