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Canadian retail group Hudson’s Bay Company (HBC) has announced it will spin Saks OFF 5TH’s online business off as a standalone entity.

HBC has partnered with growth capital investor Insight Partners to carry out the spin-off.

HBC launched a funding round led by Insight Partners with a $200m equity investment in the business. This funding will value the online business at approximately $1bn.

In March, HBC announced the spin-off after raising a $500m minority equity investment from Insight Partners, which valued Saks at $2bn.

Following this spin-off, Saks OFF 5TH’s 105 stores across the US and Canada will operate as a separate entity named O5. O5 will remain wholly owned by Hudson’s Bay.

HBC governor, executive chairman and CEO Richard Baker said: “With a unique market position and on the heels of explosive growth, we are excited to establish Saks OFF 5TH as the preeminent digitally native luxury off-price retailer.

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“As a true off-price business with a superior merchandise offering, Saks OFF 5TH has a significant opportunity to capture additional market share by further expanding its digital capabilities.

“We are pleased to once again work with Insight Partners on this transaction as they offer unmatched guidance and leadership in the digital space.

“At HBC, we remain focused on identifying value within our assets. This transaction is a prime example of how we are successfully executing on this strategy.”

As part of this restructuring, the company appointed Paige Thomas as president and CEO of Saks OFF 5TH’s new digital business.

Insight Partners will join other investors in HBC and Saks OFF 5TH, including Rhône and its affiliates.

Saks’ 40-store fleet will operate separately as SFA and be a wholly owned company of HBC.