March 7, 2014 7:01 am

Wife of Boohoo broker owns £22m stake

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The wife of a broker involved in the £300m flotation of Boohoo.com, the online fashion retailer, has a £22m stake in the business.

Clare Hughes, wife of Richard Hughes, a director and co-founder of Zeus Capital, has a 3.93 per cent share in the £560m company. Mr Hughes was himself a director of the business, known as Wasabi Frog, until he resigned three weeks ago.

Under Aim rules people with a relationship to the director of a nominated adviser, or Nomad, which is responsible for policing behaviour on the more lightly regulated junior market, can hold up to 10 per cent of a business.

But if they own a “significant” stake of 3 per cent or more they must ensure “adequate safeguards are in place to prevent any conflict of interest”.

A Boohoo spokesman said Ms Hughes, along with the board, would retain her full stake for at least 18 months after the float, so there was no conflict.

The role of Boohoo director Petar Cvetkovic is also in the spotlight. He is a non-executive director of Crawford Healthcare Holdings, a company owned by Mr Hughes. He is also chief executive of DX Group, which floated last month and has Zeus as its Nomad.

If he is classed as an “associate” of Mr Hughes, Aim rules forbid Zeus acting as Nomad.

Boohoo said: “He is not viewed as an independent. He is an expert in logistics and has been on the board for six years. He is a shareholder.”

Zeus and Mr Cvetkovic declined to comment. The London Stock Exchange said there was no definition of associate and each case was dealt with individually.

The online fashion retailer is bolstering its board by recruiting four independent directors including Peter Williams, formerly of Asos, the online clothes retailer, as chairman, Mark Newton-Jones, ex-chief executive of Shop Direct, another retailer, and Stephen Morana, chief financial officer of Zoopla, the property website, as directors.

The LSE said it did not comment on individual companies.

Part of Zeus Capital is Zeus Partners, which Mr Hughes co-founded in 2006. It is under investigation for suspected tax fraud. HMRC is continuing a criminal investigation into whether a £134m film investment scheme he helped establish through Zeus Partners was abusive.

Investors borrowed several times their outlay and could claim tax relief on losses. Mr Hughes resigned as a director last May.

A spokesman for Zeus Partners said: “We are aware that there is an HMRC investigation into these and other investments under way at this time and Zeus Partners is providing its full co-operation to HMRC.”

HMRC declined to comment.

Manchester-based Boohoo is selling 55 per cent of the business, with the board and the founding Kamani family left with 44 per cent after collecting £240m.

The shares are priced at 50p and have already been placed.

It will have a market capitalisation of £560m when it lists on March 14.

In the 10 months to December 2013 sales increased by 70 per cent to £91.9m (£54.1m) while adjusted earnings before interest, tax, depreciation were £10.1m.

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