Rent the Runway has agreed to hand majority control to private equity investors in a recapitalisation plan designed to cut debt and reignite growth, according to Bloomberg.

The transaction, led by Aranda Principal Strategies alongside Story3 Capital Partners and Nexus Capital Management, will eliminate more than $240m of debt from the fashion rental platform’s balance sheet and inject $20m in fresh equity. 

The three firms will take an 86% stake in the business before adjustments for management incentives and a shareholder rights offering. Existing investors will be able to buy up to $12m of shares at $4.08 each, with debt conversion priced at $9.23 per share.

Chief Executive Officer Jennifer Hyman described the restructuring as “an IPO 2.0 for the company,” noting that financial metrics have improved despite heavy debt constraints. She acknowledged alternatives included a potential bankruptcy filing but said the recapitalisation provides a platform for sustainable recovery.

Founded in 2009, Rent the Runway built its brand by offering clothing rentals for events and later through a subscription service. Once valued at $1bn, the company went public in 2021 but has since struggled with declining subscriber numbers, falling revenue, and a share price drop of two-thirds in the past year.

The recapitalisation will accelerate Rent the Runway’s shift to an “asset-light” model, where fashion brands supply inventory for free and share in rental revenues. Hyman said this approach allows the company to expand its merchandise base more rapidly, adding 1,000 new styles already this year, which she expects will help lure more subscribers.

“My primary action post this deal is doing even more deals with brand partners around the world,” Hyman said. “It allows us to invest in even more inventory.”

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