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UPDATE 1-HBC to launch Saks Fifth Avenue's online business as separate entity

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(Adds quotes from Baker)

March 5 (Reuters) - HBC, the owner of Saks Fifth Avenue, said on Friday it would launch the luxury department store’s e-commerce segment as a separate business following a $500 million infusion from U.S. private equity firm Insight Partners in the online business.

Homebound shoppers have lifted demand for expensive makeup and handbags online during the COVID-19 pandemic, prompting luxury goods sellers to double down on their e-commerce business at a time when store traffic has been under pressure.

“We don’t believe it’s going to be all online, we don’t believe it’s going to be all brick-and-mortar,” said HBC CEO Richard Baker in an interview. “What we’re doing going forward is an ecosystem.”

The deal values the Saks e-commerce business, called Saks, at $2 billion, HBC said. Baker added that with the deal, HBC is worth more than it ever has been before. Investors took the Canadian company private for close to C$2 billion ($1.6 billion) last year.

Luxury fashion platform Mytheresa, which HBC rival Neiman Marcus Group Inc acquired in 2014, went public earlier this year, valued at $2.2 billion.

Baker said a possible future IPO for the Saks e-commerce business “makes a lot of sense”.

HBC said the retailer’s 40-store fleet would operate separately and would be referred to as SFA. Baker said there are no plans right now to reduce the store count as other retailers shrink their footprint.

Marc Metrick, who was CEO of Saks Fifth Avenue, will take the helm at Saks, with former Amazon.com Inc executive Sebastian Gunningham also joining the e-commerce company’s board.

Insight Partners has invested in a range of technology and e-commerce companies, including Shopify Inc and Qualtrics Inc. ($1 = 1.2670 Canadian dollars)

Reporting by Praveen Paramasivam in Bengaluru and Jessica DiNapoli in New York; Editing by Shailesh Kuber and Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

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