RMB Ventures walks the talk with Studio 88

The challenge

When one of the Studio 88 partners was looking to exit in 2012, the Studio 88 founders needed an equity partner that they could trust. They approached RMB Ventures. The founders took a modest amount of cash off the table at the time, making space for RMB Ventures to take a 37% stake in the business. The management team wanted to embark on a growth journey, to grow the business from a 100 store business (turnover R1bn) to a 777 store business (turnover to cR6bn) over a 10-year period.

The RMB Ventures team held up the proverbial mirror to assist the Studio 88 management team to shift their thinking, but not at the risk of compromising freedom. The relationship developed into many informal interactions, rather than formal board settings, which suited the nature of the team.

The RMB Ventures solution

This unique 10-year partnership succeeded where so many others in the retail sector have failed. RMB Ventures took a unique approach by establishing trust and alignment with the founders around how they were going to work together and by creating the right capital structure (which usually creates anxiety for most founders). Given the nature of the business model, its growth agenda and the management team’s aversion to debt, Studio 88 was funded almost entirely with equity, avoiding debt. RMB Ventures took time to let the business grow, not only in the number of stores, but also in its level of sophistication as the business emerged from being a successful owner-managed business to a professional management team that operates the business today. 

By 2022, Studio 88 had become South Africa’s largest branded athleisure retailer, operating through various outlets, including Studio 88, Skipper Bar, Side Step and John Craig. Both turnover and revenue had increased six times and the number of stores had grown from 130 to 770.

RMB Ventures concluded the sale of Studio 88 to Mr Price on 4 October 2022. The courtship with Mr Price started informally to build trust and comfort with the investment that the Mr Price team were going to make, as well as for the Studio 88 team to gain comfort. The deal structure was critical in creating alignment with the new owners. The Studio 88 team let the deal makers from RMB Ventures largely negotiate the deal with the Mr Price team, even for the follow-on transaction, which is testament to the levels of trust between the teams.