The Mosaic fashion group, majority owned by Baugur, is targeting Russia as part of an expansion drive. Mosaic, which owns chains including Oasis, Karen Millen, Coast and Whistles, this week becomes the first UK company to float on the Icelandic stock exchange. The sale of a minority stake in the business will raise around £10m. High demand from potential shareholders has put a £300m value on the business. However, shareholders including Baugur, Icelandic bank Kaupthing, and the management team led by chief executive Derek Lovelock, are retaining their stakes.

Mosaic has also raised £30m from a private placing to institutional investors last month, and plans a £50m bonds issue later this summer. The cash will pay back £80m of debt held by Kaupthing, leaving Mosaic more strongly placed for expansion.

Karen Millen, which already trades in Russia, will have five stores by next spring, while Oasis plans seven franchised stores in Russia over the next two years. Mr Lovelock told the Times: "The experience with Karen Millen has proved that Russia is an incredibly fast-growing market and we have an excellent partner." At last month's UK Fashion Export Awards, Charles Hecker, of the Moscow Office of Control Risks Group, said there was a strong demand for UK fashions aimed at affluent Russian consumers.

He said: "Russia looks set to become the third largest non-EU market for EU apparel, after the USA and Japan and UK companies in particular are really making their mark."