Hammerson is selling its £1.5bn (€1.8bn) stake in luxury European shopping destination owner Value Retail to L Catterton, in a deal it said will generate £600m in cash as it gets rid of an “overweight, low yielding and minority stake”.

London-listed Hammerson, which holds a 42% stake in Value Retail, said it intends to use its proceeds for debt reduction, reinvestment in core markets with higher yields and a share buyback of up to £140m.

Value Retail, operating luxury shopping destinations under The Bicester Collection brand, runs nine villages across the UK and Europe.  

Rita-Rose Gagné, CEO of Hammerson, said: “This is a transformational deal for Hammerson, generating cash proceeds of £600m whilst removing an overweight, low yielding and minority stake, and positioning us for accelerated growth and value creation.

“The disposal focuses our portfolio on prime urban real estate with a transformed capital structure and the capacity and capability to advance our strategy in higher yielding opportunities with stronger returns, whilst enhancing returns to shareholders.”

Michael Chu, global co-CEO of L Catterton, said: “With its high quality portfolio, reputation for luxury, and commitment to delivering a distinctive experience to customers, Value Retail is well positioned for growth and continued success. 

“We have deep experience investing in luxury retail, and we are eager to leverage our operational expertise and global network of established relationships to partner with Value Retail and propel the business forward.” 

In 2016, a merger between Catterton’s American operations and LVMH/Groupe Arnault’s European and Asian holdings created L Catterton, the world’s largest consumer-focused private equity firm.

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