A former owner of Weightwatchers looks to have outmuscled a shareholder in Aston Martin in the final stages of a race to buy Rapha, the premium cycling gear manufacturer.
Sky News understands that Invus Group, which made a stellar return from its investment in the dieting brand, is leading a pack of bidders for Rapha, which is expected to command a price tag in the region of £200m.
Invus and Investindustrial, an Italian private equity firm that is one of two big shareholders in Aston Martin, were two of the remaining parties in the auction of the privately owned cycling business.
The emergence of Invus and Investindustrial as bidders for Rapha was disclosed by Sky News earlier on Monday.
Sources cautioned that another party could yet emerge as the winning bidder for the cycling brand, although some private equity firms which had been part of the auction at an earlier stage, such as Advent International and TPG, have withdrawn from the process.
Some potential buyers are said to have been 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 may see a further increase in demand after Chris Froome, the Team Sky rider, won his fourth Tour de France at the weekend.
The company, which is being advised by the investment bank William Blair, could strike a deal with a potential buyer within the next two weeks, according to insiders.
The auction comes on the back of soaring revenues at the business, which is partly owned by Active Private Equity, an investment firm.
A sale would 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.
Rapha and Investindustrial declined to comment, while Invus did not return calls seeking comment.
Source: SKY News