Rapha Sells

Rapha Sells

If you follow the merger and acquisition side of the bike biz then you’ve probably been aware that the leviathan of cycling apparel, Rapha, has been courting buyers. It was previously reported that LVMH, the group that owns Louis Vuitton (and scores of other luxury brands like Moët and Chandon) and ultimately bought Pinarello, was interested in Rapha, but they passed.

So who bought Rapha? Hold on to your seats.

RZC Investments. Likely, you are scratching your heads right now. It’s not a name you or anyone else in the bike industry has heard. There’s not much of a paper trail on them; one can find lots on other similarly named entities in Google.

But here’s what we can tell you: RZC is an investment group headed up by Steuart and Tom Walton. Of those Waltons. Not the John Boy and Mary Ellen variety, but the family out of Bentonville, Arkansas, who own Walmart. Steuart and Tom are grandsons and Tom is known to have kickstarted the trail building in Bentonville that has made it the hot spot for mountain biking for nearly 1000 miles in every direction.

While LVMH decided to against buying Rapha, RZC Investments had to fend off other suitors including Invus Group and Industrialinvest, which is a shareholder in Aston Martin. RZC is reported to have paid $200 million to CEO Simon Mottram and his investors. Shareholders in Rapha include Active, which has stakes in Honest Burger, Soho House and Leon.

So what did RZC get for its $200M? Well Rapha’s revenue for 2016 was £63m, which was up 30 percent over 2015. They are reportedly up 40 percent over this point last year. Considering the crazy multipliers over EBITDA that are seen in the tech sector, this was a terrific buy for RZC.

We at RKP have several unnamed sources that have told us there is an effort by Mssrs. Walton to bring more bike brands to Arkansas, to do for Arkansas what Boulder did for Colorado. There is no word on whether the apparel maker will move stateside, but if this is the kind of capital they are willing to pour into the bike sector, expect to see some other jaw-dropping purchases.

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21 comments

  1. Nico

    It will be interesting if the excellent customer service that Rapha enjoys will remain intact. For example their lifetime guarantee that includes free repair/replacement of crash damaged clothing.
    When investors look to rapidly recoup their investment such service sometimes suffers. We can only hope things remain the same.

  2. David

    I’ve been a Rapha fanboy for a long time. I am an RCC member, and am eagerly anticipating the opening of the club here in Los Angeles. But, this with the Waltons..they’re the family that begs for deregulation in every sense, fights any kind of unionization, pushes back on any increase in wages for their workers via minimum wage increases, and then has the audacity to fight the higher taxes that then subsidize the social safety net needed to buoy their underpaid employees lives and keep them solvent.

    The capital for this deal was made entirely on the backs of those folks. 1,500,000 of them that work for an average of $13.69 an hour.

    My only debate now is whether or not I liquidate my kit to move off to Twin Six, made by Voler here on the Central Coast, or some other brand. The Waltons suck for reasons that are much bigger than cycling.

    1. Geir Werner Hagen

      Spot on! I think I will make a switch towards other brands of same quality – cuz except from the design (lovely) I also love Rapha for the quality, but as someone else said here; One got to hold some standards, and the Waltons is NOT what I will endorse in any way…

      (I have had very pleasant kits from Chapeau, Isadore and VOID, so there are altertnatives en masse)

  3. scott g.

    So now that Simon & Co. have a war chest, what is their new project ?
    Are they going to Lynksey, and startup a new, even more epic bike brand ?

  4. Christian

    I’ve been a super fan for 4 years. I spend a ridiculous amount of money on their products, and I’m a founding memeber of the RCC Rapha Cycle Club, and this is it for me, I’m out! Can’t support this in any way shape or form. A guy’s gotta have standards! Mic drop…

  5. archibald

    “Considering the crazy multipliers over EBITDA that are seen in the tech sector, this was a terrific buy for RZC.”

    Cycling fashion ain’t tech, bro, so non-sequitor on the comp. 2.4x trailing sales with 30% y-o-y growth, and they probably have pretty fat on margins for now. The Walton sons aren’t their parents, and they seem to have a real love of cycling. I’d be surprised if they did much to shave costs on the quality side, and distribution will likely improve (i.e. they might actually have your size in the shop!). A big move into high-end Asian markets a la “Rapha Black” seems like the ROI move, even if it does alienate some of the core glamour tattoo targets in London and NYC.

    My 2005 Rapha base layer is still in great shape – no kidding.

  6. Andrew

    Voler makes Twin Six? Very interesting. Two of my favorite companies. Although the TS jerseys seem different than Voler stuff in fit and finish. Maybe I’m hallucinating.

  7. GeorgeL

    I agree with all the sentiment Re: Walmart. Yuck. However, given that (at least for me) Rapha is at the top in terms of style/quality/performance, I’m not sure what else is out there that can match it. Also, I live in Portland and since their North America office is based here, they are pretty tightly woven into the local scene so I’m not sure how to decouple all these things. Time will tell I guess.

  8. Alistair

    How is Rapha perceived as a brand in the US? It’s such a divisive brand in the UK and increasing global reach would seem to be a good bet for them. Some of the kit is excellent but I would say that Castelli and Assos, to name just two obvious examples, do better stuff than Rapha. The shopping experience in London is also a teeth grinding experience if you don’t buy in to the crafted image. Curious to know if it crosses the Atlantic without the baggage.

    1. Hoshie99

      I’d say in general people like the quality and style. The brand is polarizing for some for the same reasons as you see in the UK. Too much “matchy matchy” Rapha kit speaks to a certain type of cyclist.

      Early on, I liked the paired down style and attachment to the roots of cycling. But I also find the brand too precious at times. it’s a bike ride, not a cult – you know?

      In the early days, it was less popular but they seem to have broken out over the last year and a half.

      Funny enough, I was really attached to Assos (their cheapest model) as my go to bibs. I only had a few early Rapha pieces (Jerseys / Vest). Recently I bought a few Rapha bibs and they work well for me.

  9. Dave

    Yeeee-ha! Best laugh I have had in months. Can’t wait to hear about Rapha cheapo items in Walmart, just can’t wait!

  10. Pingback: Walton Brothers Take Stake in Cycling Brand Rapha | Arkansas Business News – Arkansas News

  11. Les.B.

    When Ford bought Jaguar people thought it was the end of the Jag. Turns out the latest Jags are some pretty slick machines like they’ve always been. Gives me hope that Rapha will still be Rapha in the future.

    Then again, when I think of Walmart owning Rapha, I want to borrow the exclamation from the priest in Harold and Maude:
    “makes me want… to vomit.”


    1. Author
      Padraig

      Yes, but Ford owned them before that, and Les is referring to the doomsayers who pronounced Jaguar dead (corporation) walking when Ford purchased them.

  12. Mihnea

    Rapha sells? More like Rapha sells…out.
    I cannot bring myself to support this brand anymore, now that Walmart money bought it.
    I do wonder if they would take their modern slavery statement off their website now, since Walmart is essentially modern slavery.
    Rapha should be ashamed of themselves.

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