ON THE RUNWAY
LONDON — Rapha, the upmarket British bikewear brand credited with bringing fashionable as well as functional garments to the booming cycling market, is set to get additional pedal power in the form of a major new shareholder.
The company, based in London, announced Monday that RZC Investments, an investment vehicle set up by Steuart and Tom Walton, two scions of the billionaire Walmart dynasty, would take a majority stake in the business, which was founded by its chief executive, Simon Mottram, in 2004.
Mr. Mottram, a former branding consultant who advised luxury companies like Burberry and Davidoff, started Rapha after seeing a gap in the market for style-conscious cycling clothes amid the sea of sweaty high-visibility jackets, flapping shorts and badly fitting outfits in clashing color combinations. Alongside its premium garments, which range in cost from around $70 for a long-sleeve T-shirt to $200 for gloves and $290 for a jersey, Rapha regularly invites fans to frequent its stores, known as “clubhouses,” where they can sip coffee and watch live cyclocross races on state-of-the-art television screens. It also has an international cycling club with more than 9,000 members, each of whom pays an annual $229 fee.
As the popularity of road cycling has soared over the last decade — the sector is now estimated to be worth $47 billion globally, making it the largest sports category in the world, according to the strategy consultants OC&C — so, too, have the Rapha fortunes. Sales, which hit $80 million for the 12 months ending January 2017, have grown by more than 30 percent annually for 11 years in a row. Little wonder that a slew of hungry investors, which included LVMH and the Italian private equity group Investindustrial, started to circle when rumors of a possible sale surfaced last year.
But ultimately it was the Walton duo, grandsons of Sam, the retailer’s founder, who clinched the deal in part because of their avid affection for cycling, according to Mr. Mottram.
“It was very important to me that they are both passionate cyclists,” said Mr. Mottram, who will continue to hold the position of chief executive. “If they understood the broader vision of the sport, then I felt they would also feel sure that our model is the right way to do things.” He declined to disclose what RZC Investments had paid for the majority stake, although some rival investors are said to have valued the privately held group at close to $255 million.
“A partnership with Steuart and Tom also appealed because their firm is not a rapid turnaround kind of outfit, focused on short-term gain,” Mr. Mottram said. “Their fund really does have a long-term view, which is important given the size of our ambitions for the brand.”
Steuart Walton added that he believed “Rapha represents the very best in the world of cycling.”
“Rapha’s strategic vision has set the company on a path to tremendous growth and opportunity,” he said. “We are excited to be part of this next chapter by bringing the best sport in the world to more people in more ways and places.”
A key priority for all would be expansion in the United States, the largest market for cycling in the world, accounting for 26 percent of Rapha sales. Clubhouses in Boulder, Colo., and Chicago opened this year, with another in Los Angeles set to open in the fall, and established communities are already growing in New York, San Francisco and Seattle. Mr. Mottram said he was keen to adopt a “local metro-by-metro approach,” recognizing the pitfalls suffered by other British companies that have looked at the country as a single homogeneous space.
“It is all very exciting,” he said, “not least as we all hold huge ambition for the sport and just want more and more people to enjoy it, not just in America but all over the world. Cycling ticks all the boxes when it comes to the sort of lifestyle that more and more people are turning to.”
“Cycling is a sleeping giant,” he added. “It helps you see new places, is a social activity and can easily be slotted in as part of daily life. From here on in, it will only get bigger.”