Gem Capital may buy 80% of owner of brands Zarina and befree for nearly 500 mln euro - source

MOSCOW. May 18 (Interfax) - The new contender for the fashion retailer Melon Fashion Group (MFG, manages Zarina, befree, Love Republic and Sela retail chains), in which Sistema Holdings was making a deal to purchase a large stake which fell through, is an investment company from ex-Gazprom Anatoly Paliy's Gem Capital.

A source on the market told Interfax that Gem Capital received permission from Russian authorities to acquire just over 80% of the shares of Melon Fashion Group for about 500 million euro, which implies a valuation of the entire company at about 600 million euro.

Technically, the deal will consist of two stages, the source said. First, the Cypriot I.G.M. Manufactrust Ltd. belonging to MFG. co-founder David Kellerman is buying out stakes in the retailer from Sweden's Eastnine AG and MFG Intressenter, as well as from minority foreign shareholders, increasing its stake in the company from around 34% to around 82%. Then, Russian Gem Capital will acquire the whole package from I.G.M. Manufactrust, while the authorities have ordered part of the payment to be spread over several months in order to spread out the purchase of foreign currency on the market over the same period, the source said.