Active sells Rapha to RZC Investments

The reported price would value the business at 44x its FY17 EBITDA, according to publicly available documents. However, Rapha has enjoyed significant revenue growth in recent years, with its turnover figure increasing by 37% year-on-year and EBITDA growing by 28% in its most recent financial year.

Following the deal, Active partner Nick Evans will continue in his position as chairperson at Rapha, having taken on the role in 2006. Evans declined to comment on the deal valuation, though a source close to the transaction told unquote" the figure reported is broadly in the correct region.

Speaking to unquote", Evans said the sale generated a return of more than 13x for the founding LPs, representing an IRR in excess of 75% for its most recent fund investment. He also said the business is expecting its top line to grow by more than 30% in the coming financial year.

Active was invested in Rapha via its first and second funds. It is understood the GP is currently in the process of raising a new vehicle, which is expected to hold its first close in Q1 2018.

Under the vendor's stewardship, the business has undertaken an international expansion strategy. Rapha now has 20 local websites and ships its products to around 100 countries. It has also supplied clothing to professional cycling outfit Team Sky; operates 17 clubhouses, which incorporate retail space, cafes and events; and has plans to open a further seven by the end of 2017.

According to a statement issued by the company, Rapha has been profitable since 2009 and has grown its revenues by around 25% per year since its foundation.

As part of the deal, Rapha founder Simon Mottram will also remain in his role as CEO and will retain a significant stake in the business.

Previous funding
Active was an early investor in Rapha in 2008 and the lead investor in a financing round in 2009. Evans said the GP held a minority stake prior to the divestment. Active typically invests £2-10m throughout the duration of its holding periods.

Company
Founded in 2004 and headquartered in London, Rapha produces and sells cycling clothing and accessories. The company distributes its products via its online stores and its clubhouses, which are currently located in the UK, the Netherlands, Denmark, Spain, the US, Australia, Japan and South Korea. It also operates a cycling club that organises trips and offers cycle hire.

According to publicly available documents, Rapha generated a turnover of £67.1m in the year ending in January 2017, with EBITDA of £4.5m. It has a headcount of 450.

People
Active Private Equity – Nick Evans (partner).
RZC Investments – Steuart Walton (co-founder).
Rapha – Simon Mottram (founder, CEO).

Advisers
Company – William Blair (corporate finance); Pinsent Masons (legal); Withers (legal); PwC (tax).

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• Exits
• UK / Ireland
• Consumer
• United Kingdom
• Active Private Equity