Rothy’s, the recycled plastic shoe brand, gets a deal valuing it at $ 1 billion.

The Brazilian owner of flip-flop maker Havaianas is taking a 49.9% stake in footwear brand Rothy’s, valuing it at $ 1 billion in the industry’s latest bet on the promise of sustainable fashion.

Rothy’s, who launched their shoes in 2016 and is based in San Francisco, is known for their eco-friendly and fashionable ballet flats, worn by celebrities such as Meghan Markle. The brand claims to make its shoes from single-use plastic bottles at a 300,000 square foot factory in Dongguan, China. In recent years, the company has ventured into men’s bags, wallets and moccasins, also made from recycled and marine plastic, and has stores in Los Angeles, New York and other cities.

Investors and buyers are increasingly attentive to the heritage and social impact of the clothes and accessories they support or buy. AllBirds, which also makes shoes from sustainable sources, cashed that interest this year in an initial public offering that valued it at around $ 4 billion.

Alpargatas, the shoe company that owns Havaianas, will initially pay Rothy $ 200 million in cash, followed by an approximately $ 275 million purchase of Rothy’s shares. Rothy’s founders Stephen Hawthornthwaite, who is managing director, and Roth Martin, the chairman, will remain significant owners and continue to oversee operations, they said in an interview.

Rothy’s, which generated roughly $ 140 million in net income in the year to November, is “significantly profitable,” Hawthornthwaite said. The company has committed $ 5 million from outside investors since its inception and will invest the proceeds from the Alpargatas deal in brand promotion and use the Havaianas network to expand its retail presence.

Alpargatas has the option of buying as much as all of Rothy’s between the first and fourth anniversary of the deal, which was closed on Monday. Roberto Funari, CEO of Alpargatas, said the deal would allow his company to expand its shoes beyond iconic flip flops.

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