US private equity firm KKR, the owner of Boots, is set to take a major stake in online retailer The Hut Group, its first foray into the burgeoning online fashion market.
A group of investors led by KKR will buy just under 20 per cent of the Manchester-based company from existing shareholders for about £100m.
The Hut, founded in 2004, sells a diverse range of upmarket goods ranging from Beats headphones to Joseph Joseph kitchenware.
KKR will finance the deal, first reported by The Sunday Times, with its balance sheet rather than a buyout vehicle due to the smaller sums involved in the transaction.
The group made a similar balance-sheet financed acquisition earlier this month when it bought Scottish energy firm OEG Offshore.
The buyout will provide a windfall for The Hut Group’s smaller backers, who will exit their stake in the company by selling to KKR.
The retailer was founded by chief executive Matthew Moulding, who owns 17 per cent but is understood to be increasing his ownership to around 20 per cent in the deal.
Hut Group’s backers include heavyweight industry figures such as former M&S chief executive Sir Stuart Rose and ex-Tesco boss Sir Terry Leahy, but they will keep their stakes in the firm as part of the investor reshuffle.
The Hut had been a prime candidate to list on the London stock market this year, but Moulding shelved the idea due to fears over escalating prices in the technology sector.
KKR is unlikely to return it to public markets anytime soon after the group was stung by the initial public offering of another of its UK retailers, Pets at Home, earlier this year.
The group has seen the value of its holdings in the company tank from 245p down to the current price of 183p on Friday.
All parties declined to comment.