An investment vehicle set up by two scions of the billionaire Walmart dynasty will this week emerge as the victor of a £200m race to buy Rapha, the British maker of upmarket cycling gear.
Sky News has learnt that RZC Investments – set up by Steuart and Tom Walton, both grandsons of Sam, the giant retailer’s founder – has clinched a deal to buy Rapha.
The transaction is expected to be announced on Tuesday, according to insiders.
Sources said that it would bring a provider of long-term patient capital to Rapha, an approach which helped RZC to see off competition to buy the cycling brand from the likes of Invus Group and Investindustrial, an Italian private equity firm that is a shareholder in Aston Martin.
Some potential buyers were deterred by the lofty value expectations of Rapha’s shareholders, with the company potentially selling for a price worth more than 20 times annual profits.
Rapha is a popular brand among serious amateur riders, and hopes to see a further increase in demand after Chris Froome, the Team Sky rider, won his fourth Tour de France last month.
Image: Chris Froome celebrated with his son after winning his fourth Tour de France
RZC is working with BDT Capital Partners on the deal, while Rapha is being advised by the investment bank William Blair.
The sale comes on the back of soaring revenues at Rapha, which is partly owned by Active Private Equity, an investment firm.
A sale will enable Rapha’s shareholders to cash in on a fast-growing interest in cycling, both in the UK and internationally, despite persistent questions over the sport’s governance at a professional level.
Road cycling is now estimated to be a $47bn-a-year global market, making it the largest sports category in the world.
Rapha was founded in 2004 by Simon Mottram, a branding consultant who disliked the garish polyester outfits which dominated the cycle-wear market.
Mr Mottram subsequently sold a stake in the business to Active, which has also acquired shareholdings in companies including Honest Burger, Soho House and Leon, the healthy fast food chain.
Revenues in the year to January were £63m, up 30% on the previous 12 months, and sales are said to be 40% higher so far this year.
Much of that growth was driven by Rapha’s growing international customer base, with the brand now present in retail locations in more than a dozen cities from Chicago to Seoul.
Among Rapha’s partnerships was a four-year deal to supply Team Sky, the professional cycling team backed by Sky plc, the owner of Sky News. That deal ended last year.
According to the company, it employed more than 350 people at the end of 2016, and has an international cycling club with more than 9,000 members, each of whom pays an annual £135 fee.
A spokeswoman for Rapha declined to comment.
Source: Sky