LONDON — British e-tailer Asos Thursday said it has entered a joint venture with Heartland, the investment and holding company representing the interests of Bestseller owner Holch Povlsen and his family, which will purchase a 75 percent stake in the Topshop and Topman brands.

The deal is set to raise 135 million pounds, or $178 million, to help Asos repay debts amid refinancing. Asos will have the rights to sell a further 5 percent share for 9 million pounds. Nordstrom, which acquired a minority interest in the Topshop and Topman brands in 2021, will continue to hold a minority interest in Asos.

More from WWD

• Fast-fashion Competition Could Heat Up With PrettyLittleThing Focusing More on U.S.

• Nick Beighton Faces the Challenge to Steadily Steer Matches to Success

• ASOS Media Group Teams Up With Rokt for AI and Machine Learning Tech

As part of the deal, Asos will have certain design and distribution rights for the Topshop and Topman brands in return for a royalty fee to enable it to continue marketing and selling the brands online.

Asos added the deal will help accelerate its core Back to Fashion strategy, which was unveiled in November 2023, and fund the relaunch of the Topshop website within the next six months.

José Antonio Ramos Calamonte, chief executive officer at Asos, said: “Topshop and Topman have made good progress since we acquired the brands in 2021. The new joint venture with Heartland is a testament to the brands’ potential and the partnership will help bring Topshop and Topman to more customers globally.”

Lise Kaae, CEO of Heartland, said the deal can bring “the best of the Topshop and Topman brands to customers globally while supporting Asos’ strategy to obtain a more efficient capital allocation.”

For fiscal 2025, Asos said the transaction is expected to have a 10 million to 20 million pound negative impact on earnings before interest, taxes, depreciation and amortization, but the situation will improve over time.

The company expects its adjusted EBITDA for fiscal 2024 to stand at the top end of consensus estimates with sales slightly below guidance. Results for the fourth quarter will be released on Oct. 15.

Jelena Sokolova, senior equity analyst at Morningstar, said the sale indicates “a capital-destructive move, raising questions about the quality of previous capital allocations. However, the sale can be seen as a strategic step to enhance balance sheet quality.”

Sokolova added with net debt at 348.8 million pounds as of March 2024, this move should improve Asos’ financial standing, providing 118 million pounds in cash and reducing borrowings by 13 million pounds.