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The biggest story of the week is how Supreme Founder James Jebbia quietly orchestrated the sale of a minority stake in Supreme to The Carlyle Group, who reportedly valued Supreme at over $1 billion.

Terms of the deal were undisclosed, however, according to various publications, sources close to the company confirmed that Carlyle paid around $500 million for a possible 50 percent stake in the company.

While the announcement of the sale itself sent shockwaves through the streetwear community, the reported financial details caused the biggest surprise. Why is Supreme’s valuation so high and what does it mean for Supreme’s meticulously curated reputation?

Business of Fashion will have you believe that its reputation is more of a myth than Supreme’s legion of passionate supporters thinks. According to the publication, Supreme has had secret outside financial backing for some time now.

Supreme Founder James Jebbia claimed to BoF that ”working with Carlyle allows us to concentrate on doing what we do best and remain in control of our brand, as we always have.” Perhaps because Supreme already has experience with external financial backing.

In the article, the BoF outlines how the brand grew a $1 billion business with outside help that has existed since 2014. BoF report that three years ago, Goode Partners, a New York-based private equity firm, took a minority stake in Supreme.

Supreme was not listed as a portfolio company on Goode Partners’ website. One of the only public ties between the two is Keith Miller, a partner at Goode, who also sits on the board of Supreme.

Jebbia never spoke of the deal, telling BoF in 2016: ”As a small brand, we do it all. We don’t need an investor, we would never go anywhere or do anything where we feel it would compromise what we do.”

Apparently, Goode provided operational support as well as capital that helped Supreme expand its retail network, ultimately opening its tenth store in Paris in 2016.

Private equity firms generally get involved with one goal in mind — making money. It is thought that Goode Partners have now sold their stake in Supreme on to Carlyle after helping grow the label and putting it in a position to be able to profit from it.

Goode benefitted by staying quiet about a stake in Supreme, allowing the brand to appear independent on the outside. Carlyle’s investment does not have that advantage.

Ultimately they too will be looking for an exit, and the two most likely options are a corporate buyout (by, say, LVMH) or going public via an IPO.

Now meet Fedez, the Supreme obsessed rapper.

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