The transaction values the Spanish company at about $1.1 billion, according to a person familiar with the deal. Recover majority owner Story3 Capital Partners also participated in the investment.
“The fashion and apparel sector is one of the most nonsustainable,” said Peter Comisar, Story3’s managing partner and a former Goldman Sachs partner, citing the amount of water used in clothing production. “That is an element that is, perhaps, one of the most wasteful pieces of the equation.”
But sustainability efforts are taking hold across the fashion industry, driven by regulatory actions and consumer demand, Mr. Comisar said. Recover offers both a proprietary technology to provide fiber blends with color at a lower environmental cost and a brand of recycled fiber for collaborators such as retailers Primark, Zara-parent Inditex SA and Revolve Group Inc., he said.
“That Recover name will stand for something important in the consumer’s mind” as a stamp of authenticity and transparency to the quality and methods used in making the garment, Mr. Comisar said.
Pacific Palisades, Calif.-based Story3 acquired a majority stake in Recover in 2020. The founding family retained a minority interest.
Recover is a materials-science company that traces its roots to 1914 and a textile factory in Banyeres de Mariola, a small town in southeastern Spain. The business has focused on sustainable materials and recycling since 1947.
Back then, however, sustainability wasn’t fashionable.
“My father never said this was a recycled cotton product,” said Alfredo Ferre, the company’s chief executive and his family’s fourth generation at the helm. “He simply said it was cotton.”
The market for so-called ethical fashions is expected to reach about $10 billion in 2025, growing at a compound annual rate of about 9.7%, according to data analysis firm Research and Markets. Still, most discarded clothes end up burned in incinerators or buried in landfills.
Recover turns textile waste into recycled cotton fibers and cotton blends, reducing the use of solvents and water and offering an alternative to discarding the material.
The company opened its first manufacturing plant outside Spain last year and plans to use the latest cash infusion for further international expansion, focusing on locations in Asia and Latin America. Recover has manufacturing centers in Pakistan and Bangladesh and plans to add a second location in Bangladesh and another in Vietnam this year.
The proximity of its plants to areas where textile production and waste generation take place helps Recover reduce both operating costs and its carbon footprint, such as greenhouse-gas emissions, company officials said.
Recover is also increasing output, aiming to produce more than 350,000 metric tons of recycled cotton fiber annually by 2026, said Samir Shah, Story3 managing director and a company director. He said the company expects to generate about $1 billion in annual revenue by 2026.
Before Story3’s investment, Recover produced about 4,000 metric tons of recycled cotton fiber annually, Mr. Ferre said.
“What we’re here to do is…to create a global solution for retailers in a mass way” through substantially increasing Recover’s production, said Ben Malka, an operating partner with Story3 and Recover’s executive chairman. “It’s got to be big numbers to make any difference to what’s happening in the world.”
Letitia Webster, managing director and chief sustainability officer of Goldman Sachs Asset Management, said Goldman aims to drive sustainability through backing businesses like Recover. She is joining Recover’s board of directors as part of the deal.
Recover’s production boost fits well into Revolve’s plans, said Michael Mente, a co-founder and co-CEO of the online fashion retailer.
“We’re continually looking to invest and expand,” Mr. Mente said. “This investment that Recover has is only going to strengthen them and also strengthen our partnership.”
While the focus is now on recycled cotton, he said, “ultimately, we’d like to have sustainable fabric across every category.”
In addition to the production expansion, plans call for building Recover’s identity as an “ingredient brand” in clothing and other products that consumers will recognize and trust, Mr. Malka said.
Juan Chaparro, group director for supply chain, sourcing and quality for Primark stores, said the chain and other retailers can’t address the fashion industry’s environmental impacts alone.
“The future in the industry goes to the ingredient brands to help us to solve our problems,” said Mr. Chaparro, who helped introduce Recover to Story3. “So we have to partner. We have to find the right partners to really achieve our sustainability commitments.”
In the end, he said, “We don’t want our customers to buy more from us—we want our customers to buy better.”
This story has been published from a wire agency feed without modifications to the text
Source: livemint.com
