Sports Direct has drafted in a head of strategic investments to review the shareholdings the retailer has built up in other businesses.

Liam Rowley, a former equity research analyst, has taken on the role – and he will have plenty on his plate.

Having amassed stakes in retailers such as Game, French Connection and Debenhams over the past few years, what does Sports Direct’s investment portfolio look like and what could Rowley do with it?

House of Fraser

Mike Ashley took his first direct stake in another retailer in the spring of 2014, when he snapped up an 11% shareholding in House of Fraser from entrepreneur Sir Tom Hunter.

The move was thought to be designed to derail the sale of the department store group to Chinese conglomerate Sanpower – a coup that did not succeed.

Ashley had reportedly been eyeing a takeover of House of Fraser for some time in the build-up to Sanpower’s acquisition of an 89% controlling stake, and had plans to sell Sports Direct’s fashion brands through the department stores.

However, three and a half years later, there has been no evidence of the two businesses working together.

Rowley could well view the shareholding as one Sports Direct can afford to offload.

Ashley, however, may have other ideas should Sanpower decide to sell up amid turbulent trading times for House of Fraser.

Debenhams

Sports Direct began building its stake in Debenhams back in December 2014, taking a put-option on 6.6% of its shares.

The following month, it replaced that with a new option to acquire 10.5% of shares.

In August this year, Ashley’s business took a direct stake in Debenhams for the first time, becoming the retailer’s second-largest investor by acquiring 10.54% of its shares.

“Sports Direct launched nine concessions in Debenhams stores, a venture it scaled back earlier this month when it revealed plans to shutter four of those”

On the day Sports Direct acquired that stake, Debenhams’ share price closed at 40.75p, but it had risen 12.9% to 46p when markets closed yesterday.

Typically, Ashley’s investments have been in retailers that he believes could provide Sports Direct with complementary opportunities or potential new routes to market.

Debenhams, which this morning posted a drop in full-year profits, is a prime example of that strategy.

Sports Direct launched nine concessions in Debenhams stores, a venture it scaled back earlier this month when it revealed plans to shutter four of those.

But as well as opening Sports Direct up to the Debenhams customer, Ashley may also have gleaned learnings from the department store’s strategy as he bids to turn his business into the ‘Selfridges of sport’.

Having previously ruled out a full takeover bid, Sports Direct appears unlikely to increase its Debenhams stake.

Indeed, with its concession partnership scaled back, Rowley could consider streamlining its shareholding, too.

Findel

Ashley added a stake in home shopping group Findel to his growing portfolio in September 2015, snapping up an 18.9% holding.

It came as Findel, which owned football strip retailer Kitbag at the time, revealed it had agreed terms to sell that business to a third party, “subject to contract”.

Ashley’s pounce was thought to be designed to derail the sale of Kitbag, which he had been eyeing.

Sports Direct raised its stake to 29.79% last March, a month after Kitbag had been offloaded to US-based sports merchandise business Fanatics for £11.55m.

After Ashley also came up short in an attempt to become Findel chairman, it is unclear what value he sees in retaining such a large stake in the business.

Any partnership with Findel to leverage its education and Express Gifts divisions would seemingly be out of kilter with the Sports Direct proposition – and with Findel’s share price down 9.4% since the turn of the year, there appears little value in retaining such a hefty interest.

Goals Soccer Centres

Ashley’s strategic stakes stretched beyond retail when he acquired a stake in Goals Soccer Centres in November 2015 – a shareholding he increased to 4.7% in August this year.

Such a relatively small interest would indicate that the Newcastle United owner has no grander plan to acquire the business, but Ashley could again see ways for them to work closer together.

Sports Direct could sell sports equipment at Goals venues, for example, to help boost its reach and grow brand awareness among footballers.

But does Sports Direct require a stake in Goals in order to do this?

That’s a question Rowley will surely be asking Ashley in his new role.

French Connection

In February this year, Sports Direct took an 11% stake in ailing fashion retailer and brand French Connection after buying 10.7 million shares.

By July, it increased that stake to 27% after buying out activist investors Gatemore and OTK, taking it close to the threshold necessitating a formal takeover bid.

“The sports retail giant already sells a range of French Connection clothing, and Ashley has form in snapping up both sports and fashion brands”

French Connection said at the time that it could not comment on what Sports Direct’s plans were and they remain unclear.

But of all the businesses Sports Direct holds stakes in, French Connection would be the most likely target for a full takeover.

The sports retail giant already sells a range of French Connection clothing, and Ashley has form in snapping up both sports and fashion brands.

He owns brands such as Slazenger, Dunlop and Lonsdale, while Agent Provocateur, snapped up in March, is stocked in Ashley’s Flannels department store business.

French Connection would make a good addition to that stable, but buying out founder and boss Stephen Marks – who retains a 42% stake – could be easier said than done.

Game

Having firmly established a penchant for snapping up stakes in struggling businesses, Ashley added Game to that list in July.

Sports Direct acquired 44 million shares – a 25.75% stake – in the computer entertainment specialist just weeks after it posted a profit warning.

Game shares rose by more than 15% to 28p following the Stock Exchange announcement about Ashley’s purchase, and closed at 37p yesterday.

While Sports Direct’s swoop fuelled speculation of a full takeover bid, Game said it was looking forward to “working collaboratively” with the retailer “to explore the clear opportunities” within the gaming, live events and esports markets in which it operates.

Although it is yet to reveal any details of such collaboration, there could be opportunities for Sports Direct to open Game concessions and gaming areas in its larger stores to increase dwell time, or to become the ‘official retailer’ of sportswear at its live events.

Although a full takeover is unlikely at this stage, there are a number of potential benefits for both retailers in working together.

Rowley will surely maintain Sports Direct’s stake in the likelihood that the share price inches further in the right direction.