HEIQ: HUGO BOSS and LYCRA back new climate positive yarn

14th February 2022

HUGO BOSS invests in HeiQ’s new sustainable yarn

HUGO BOSS invests in HeiQ AeoniQ and The LYCRA Company acquires exclusive distribution rights

HeiQ Plc (LSE: HEIQ), a Swiss IP innovator and established global brand in materials and textile innovation which operates in high-growth markets, has signed a development partnership agreement with HUGO BOSS (MDAX: BOSS) to support the commercialization of HeiQ’s latest innovation, HeiQ AeoniQ, a high performance, climate positive, cellulose yarn aimed at decarbonizing the fashion industry. HUGO BOSS, one of the leading companies in the global premium apparel market, has invested US$5 million in HeiQ’s 100% owned subsidiary at an implied valuation of US$200 million. HeiQ AeoniQ LLC will use the proceeds towards funding the pilot commercialization plant, scheduled for Q2 2022.

As well as the initial investment, HUGO BOSS has agreed to make additional deferred payments of up to US$4 million, subject to the completion of specific project milestones. The agreement also contains a call option, enabling HUGO BOSS to acquire an additional holding in HeiQ AeoniQ LLC at the same implied valuation as the initial equity investment. Today’s transaction is the first sustainability-linked equity investment made by HUGO BOSS as part of its ‘CLAIM 5’ growth strategy, which includes a firm commitment to further strengthen its sustainability efforts to deliver both measurable impact, as well as emotional engagement with the consumer.

In addition, HeiQ has signed an agreement with The LYCRA Company, whereby it will become the exclusive distributor for HeiQ AeoniQ yarns. The LYCRA Company will pay an undisclosed but substantial technology fee and deploy industry expertise and sales resources to accelerate commericalization, subject to the completion of specific project milestones. As a global leader in stretch and performance fibers and being renowned for its innovation prowess and consumer ingredient branding, The LYCRA Company has committed to develop the technology for broad application in textiles. The HeiQ Directors believe that The LYCRA Company is the ideal partner to bring the new HeiQ AeoniQ yarn to market.

HeiQ AeoniQ Overview

  • HeiQ anticipates delivering the first HeiQ AeoniQ yarns in H2 2022. Discussions for category-exclusivities with additional leading brand partners are ongoing and progressing well.
  • HeiQ AeoniQ is designed as a substitute for existing synthetic filament yarns, such as environmentally persistent Polyester and Nylon, which constitute over 60% of global annual textile output of 111 million metric tons (Statista).
  • The global Polyester and Nylon fiber market is worth an estimated US$135 billion with an expected CAGR of >3.5% over the next decade (Statista).
  • The fashion industry represents a third of the global US$1.7 trillion (Statista), textile market and is responsible for more than 10% of global CO2 emissions, over 20% of waste water worldwidei and more than 20% of the microplastics pollution of the oceansii. Polyester and Nylon take up to 1,000 years to degradeiii and today more than 70% of textiles are disposed in landfill with only 1% close-loop recyclediv.
  • The fibers of HeiQ AeoniQ are made from cellulosic biopolymers that bind CO2 from the atmosphere. For every ton of Polyester & Nylon substituted by HeiQ AeoniQ, the Directors believe that potentially up to five tons of CO2 can be reduced. HeiQ is currently exploring the opportunity to issue carbon credit certificates with HeiQ AeoniQ.
  • The manufacturing process for HeiQ AeoniQ is expected to consume 99% less water than cotton yarns and HeiQ AeoniQ is designed to offer comparable performance properties to Polyester, Nylon and conventional regenerated cellulose yarns.
  • When compared to conventional Polyester, Nylon, cotton and conventional regenerated cellulosic products, the production of HeiQ AeoniQ yarns will aim to have the best-in-class environmental credentials, as it is designed to be recyclable in a circular textiles economy, will use 100% renewable energy for manufacturing, will feature closed- loop recycling for more than 99.5% of materials used, will use no restricted substances and will not draw on arable land, pesticides or fertilisers for its feedstock.
  • Mr. Martin Gebert-Germ, a viscose filament yarn expert with 30 years of experience in the textile industry, is leading the commercialization of HeiQ AeoniQ LLC as CEO.

HeiQ Group co-founder and CEO, Carlo Centonze said:

“The financial commitments by such prestigious companies as HUGO BOSS and The LYCRA Company are strong endorsements of the enormous potential we see in HeiQ AeoniQ, which is one of seven HeiQ technology platforms. These agreements also demonstrate our ability to commercialize our HeiQ AeoniQ IP, which, whilst still at an early stage, has secured third party investment at an implied US$200 million valuation. We believe that, because of its physical strength, HeiQ AeoniQ yarn is a versatile alternative to Polyester and Nylon and its climate positive qualities create a very exciting future market opportunity for HeiQ, as fashion brands and retailers come under increasing pressure to do their part in commercializing their products and reduce their environmental footprints.”

Daniel Grieder, CEO of HUGO BOSS commented:

“Our exciting partnership with HeiQ on HeiQ AeoniQ represents yet another important milestone in our journey towards becoming the leading premium tech-driven fashion platform worldwide. Consistent with our bold mission statement ‘We Love Fashion, We Change Fashion’, this game-changing collaboration with HeiQ enables us to further push innovation and sustainability across our brands’ offerings, thereby driving measurable impact for the environment and society alike.”

Julien Born, CEO of The LYCRA Company commented:

“Sustainability continues to be a core tenet of The LYCRA Company’s strategy as we are focused on providing value-added technologies to help our customers create and develop exceptional fabric and garment offerings while reducing the environmental footprint, without sacrificing comfort or performance. Through our close collaboration with HeiQ, we are working together to fast-track the commercialization of HeiQ’s AeoniQ yarn and are excited by the impact this ground-breaking innovation will have on the apparel industry.”

Annual results

The Company expects to announce its annual results for full year 2021 by the end of April 2022. The Directors expect the results to be well in line with market expectations.

Footnotes

i) European Parliament, the impact of textile production and waste on the environment, https://www.europarl.europa.eu/news/en/headlines/society/20201208STO93327/the-impact-of-textile-production-and-waste-on-the-environment-infographic, retrieved on 10 February, 2022

ii) Science of The Total Environment, vol 652, 2019, 483-494

iii) ACS Sustainable Chem. Eng. 2020, 8, 9, 3494-3511

iv) Ellen MacArthur Foundation, A new textiles economy: Redesigning fashion’s future, (2017, http://www.ellenmacarthurfoundation.org/publications)

Below is an interview with HeiQ’s CEO & FD, who provide the highlights from the recent results

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