Matchesfashion.com confirmed that it has sold a majority stake of its business to Apax Investments.
Tom and Ruth Chapman, as well as existing venture capital backers Scottish Equity Partners and Highland Europe, will retain minority stakes in the business.
Terms of the transaction, which is expected to close in the fourth quarter of 2017, were not disclosed. However, according to media reports, the company’s valuation rose to 800 million pounds, or $1 billion at current exchange, following a bidding frenzy by a number of private equity investors, including Permira and KKR.
Financial sources in the U.S. said the 800 million pound valuation for Matchesfashion.com seems about right for a company that makes around 250 million pounds in annual volume.
“The business has never been in a stronger position and — after 30 years of growing this business — Ruth and I are ready to take on new challenges while remaining shareholders and taking on an advisory role,” said Tom Chapman. “Our world-class team — led by CEO Ulric Jerome and CFO Fiona Greiner — will continue to drive Matchesfashion.com to becoming the No.1 luxury fashion commerce company in the world.”
Jerome, who has been working with the Chapmans to embrace new forms of digital commerce and improve customer experience, said that the new partnership will aid Matches’ global expansion: “We will continue to support our potential to become the No.1 luxury fashion commerce company in the world. Apax’s experience in both consumer and technology spaces will be a great fit with our business.”
The company’s rising profits and ongoing commitment to digital innovation and customer experience made Matches an attractive investment for Apax, which is perhaps best known for its investments in Calvin Klein and Tommy Hilfiger’s European business. (Both Tommy Hilfiger and Calvin Klein are now owned by PVH Corp.)
In 2016, revenues at the luxury omnichannel retailer surged 61 percent year-over-year to just over 204 million pounds, while earnings before interest, taxes, depreciation and amortization, or EBITDA, came to 19 million pounds — nearly six times higher than the previous year.
Although the company declined to offer projections for fiscal 2017, sources said revenues could exceed 300 million pounds, with profits heading toward 40 million pounds.
In an interview in March — when the company was named a partner in the 2017 New York Fashion Tech Lab accelerator program — chairman Tom Chapman said the bulk of the Matchesfashion.com business is done via mobile, with 85 percent of revenues coming from outside the U.K., and the U.S. being its top market.
Changing consumer preferences have motivated Chapman and his team to seek out for talent, both on the creative and technological side. His firm was meeting with applicants for the accelerator program, with plans to mentor at least two program participants and then catch up to other applicants that didn’t make the final cut later on.
Earlier this month, the company also revealed plans to expand its photography, video and editorial teams into a new creative hub in East London, where they will have access to state-of-the-art facilities and explore new ways of presenting product on the site, as well as increase the amount of product uploaded on a weekly basis.
In a bid to promote its editorial content, the retailer partnered with AI content distribution platform E-Contenta, which uses an algorithm that collects and analyzes data on user behavior to refine the distribution of its weekly online magazine The Style Report.
Gabriele Cipparrone, a partner at Apax Partners, said, “Matchesfashion.com has emerged as one of the leading players in the online luxury space globally. Tom and Ruth, along with Ulric and his management team, have done a tremendous job in expanding the business in a sector that continues to demonstrate huge growth potential. Online penetration of the luxury market is still small, and we anticipate this will grow significantly in the coming years.”