(Reuters) - Sportswear retailer Frasers (L:FRAS), formerly Sports Direct , has bought a 12.5% stake in handbag group Mulberry (L:MUL) pushing ahead with plans to move upmarket into the luxury business.
The purchase makes Frasers, controlled by British billionaire Mike Ashley, the third biggest investor in Mulberry, based on Refinitiv data.
Frasers was created when Sports Direct unveiled a rebranding in November to reflect the group's broader range of products, including new Frasers luxury lifestyle stores.
Michael Murray, Ashley's future son-in-law, is the architect of the company's move away from a sportswear retailer. He has also held roles such as Sports Direct's head of innovation.
Sports Direct purchased the House of Fraser department store chain out of administration for 90 million pounds in August last year.
"A key strategic priority for Frasers Group is the elevation of our retail proposition and building stronger relationships with premium third party brands," the company said in a statement on Monday.
Sports Direct was founded by Ashley as a single store in Maidenhead, southern England, in 1982. It now employs 29,400 in 20 countries across six business areas - UK Sports Retail, Premium Lifestyle, House of Fraser Retail, European Sports Retail, Rest of World Retail and Wholesale & Licensing.
The company also plans to bring Frasers "luxury lifestyle stores" to British shopping streets within its next financial year - 2020-21.
Mulberry, whose bags sell for around 1,000 pounds, reported an annual loss in June last year as it took a 3 million pound hit from the collapse of department stores group House of Fraser.
House of Fraser was an important partner for Mulberry, with its stores containing most of the luxury group's concessions outside London. House of Fraser stores accounted for 40% of Mulberry's UK outlets at the time of the collapse.
Mulberry was founded in 1971 in Somerset, England by Roger Saul.