CAPE TOWN, South Africa — Old Mutual Ltd.'s private-equity arm is backing a plan by Footgear Ltd. to buy a unit of Edcon Holdings Ltd.'s in southern Africa to create one of the region's largest sports and casual wear businesses.

Footgear plans to combine Edcon’s Edgars Active and High Key assets and rebrand existing stores under the Footgear name, in which Old Mutual holds a majority stake. The deal would be funded from a 3.7 billion rand ($265 million) fund previously raised by the Johannesburg-based insurer.

“We have always liked the branded footwear retail space, which is a growing market globally as consumers shift away from formal to more informal and casual wear,” Old Mutual Private Equity’s investment principal Chumani Kula said in an emailed response to questions. “It’s a growing industry that carries certain defensive characteristics, which have enabled the industry to grow top line in South Africa even in a constrained economic climate.”

The deal would give Footgear 180 stores and help Edcon restructure debt after it secured $191 million to recapitalise the business in March. Edcon is seeking to simplify its offering by reducing the number of different store brands it operates and reduce floor space following a bailout from investors and landlords.

“We are pleased that this transaction will not result in any job losses,” Edcon said by email. “The ongoing process of consolidating, merging and rebranding of the businesses will ensure an offering of a selected set of private and international brands, while also being a fashion and beauty retailer that provides credit.”

Old Mutual’s private equity unit is part of Old Mutual alternative investments that manages $4 billion of assets in south, west, and east Africa. The deal is subject to conditions, including regulatory approvals.

By Loni Prinsloo; editors: Rebecca Penty, Stefania Bianchi and Vernon Wessels