Alo Yoga’s parent company is exploring a potential investment that could value the US maker of celebrity-donned workout clothes at about $10 billion, according to people familiar with the matter.

The deal deliberations come as the privately held company makes strides in winning young consumers away from bigger brands such as Lululemon Athletica and Nike, often thanks to savvy marketing using internet influencers.

Alo Yoga founders Danny Harris and Marco DeGeorge have hired investment bank Moelis to advise on options that include selling a stake in the company, the sources said.

The potential investors, which include private equity firms and sovereign wealth funds, have discussed structuring a deal so that they receive preferential returns or debt-like protections, the sources added.

No transaction structure has been agreed, and it is possible that Alo Yoga decides against any deal, said the sources, who requested anonymity because the matter is confidential.

Spokespeople for Alo Yoga and Moelis declined to comment.

Alo, an acronym for air, land and ocean, is often worn by celebrities such as Taylor Swift, Katie Holmes, Hailey Bieber and Kendall Jenner and featured in paparazzi photos.

It was founded in 2007 and has more than 50 stores in the US and several international locations. Many locations have yoga studios offering a variety of classes.

The company’s bestsellers include $128 leggings and $108 sweatshirts. Alo has also expanded into footwear, beauty and wellness categories.

Alo Yoga is part of Harris and DeGeorge’s company Color Image Apparel, which also includes their Bella+Canvas brand. Bella+Canvas manufactures blank tee shirts and other apparel for wholesalers.

Los Angeles-based Color Image generated over $1 billion of revenue in 2022 and the business doubled in size from 2021 to 2022, Harris, who is also Alo’s chief executive officer, told the Wall Street Journal in May.

Dealmaking is picking up in the athleisure sector. Activewear brand Vuori Inc is planning an initial public offering as early as next year after securing an investment from SoftBank Group Corp at a $4 billion valuation in 2021.

Kim Kardashian’s underwear brand Skims, which sells active and loungewear, also raised financing this year at a roughly $4 billion valuation.

By Abigail Summerville; Editing by Leslie Adler

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