Sustainable footwear brand Rothy's receives strategic investment from Brazil's Alpargatas
Alpargatas S.A., the Brazilian owner of the Havaianas flipflop label, has announced that it is making a strategic investment in Rothy’s, Inc., a San Francisco-based brand specialized in recycled footwear, via a two-step transaction that will ultimately bring the Californian company’s valuation up to $1 billion.
The first part of the transaction will see Alpargatas make an investment of $200 million in primary capital, while the second step involves an offering to acquire approximately $275 million in Rothy’s shares from current stockholders.
Once the transaction is complete, Alpargatas will own 49.9% of Rothy’s and will have a call option to acquire the additional shares of the Californian company from selling stockholders between the first and fourth anniversaries of the deal.
Founded in 2012 by Stephen Hawthornthwaite and Roth Martin, Rothy’s started out as a women’s footwear brand seeking to manufacture stylish and comfortable shoes using recycled materials and knitting techniques that minimize waste. Since launch, it has transformed more than 100 million single-use plastic water bottles into shoes and has also expanded into the men’s and accessories categories. A digital-first business, the brand currently generates 98% of its sales via online channels.
Having established a growing customer base in the U.S., Rothy’s is hoping to use the investment from Alpargatas to drive the acceleration of its brand and retail expansion strategy. This includes plans for international expansion, with the brand currently eyeing opportunities in Asia, Europe and Brazil.
Rothy’s, which produces its shoes in a dedicated 300,000-square-foot manufacturing facility in Dongguan, China, also intends to use the funds to increase its factory operations.
“In Alpargatas, we are pleased to have found an established industry leader with a rich heritage, tremendous scale and resources, vertically-integrated operations and a people-first approach that clearly aligns with our values,” said Martin in a release. “Very few footwear brands understand the challenges and unique opportunities that owning a factory presents – and Alpargatas has written the playbook.”
Alpargatas, which currently owns and operates six factories in Brazil, said that Rothy’s is aligned with the company’s four strategic business pillars: global, digital, innovation and sustainability.
“We are excited to welcome Rothy's to our portfolio, and admire Rothy's entrepreneurial, passionate founders and team,” commented Alpargatas CEO Roberto Funari. “We value their digital-first business and loyal customer base, and view this partnership as an important opportunity to advance our global strategy with increased relevance in the North American market.”
Following the completion of the transaction, Hawthornthwaite and Martin will continue to oversee operations at Rothy’s and will also maintain a significant equity stake in the company. Both Funari and Stacey Brown, an independent member of the Alpargatas board of directors, will join the Rothy’s board, which will expand to nine seats, four of which will be reserved for Alpargatas.
Other existing Rothy’s investors, including Lightspeed Ventures, will also maintain a meaningful equity position in the company after the transaction.
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