The Hudson’s Bay Co. is splitting its Saks Fifth Avenue store fleet and saksfifthavenue.com into separate companies.

Insight Partners, a private equity firm, has entered into a partnership with HBC, establishing Saks Fifth Avenue’s e-commerce business as a stand-alone entity, which will be known as Saks. Insight Partners has made a $500 million minority equity investment in Saks, valuing the business at $2 billion, HBC said Friday.

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The 40-store Saks Fifth Avenue fleet will operate separately as an entity referred to as SFA, which remains wholly owned by HBC.

HBC said that as separate but related sister companies, the Saks e-commerce operation, and SFA stores will be “better able to appropriately plan for and invest in their respective service models.”

Transforming the Saks Fifth Avenue stores and e-commerce businesses into separate companies could be a prelude to spinning off the e-commerce operation into a public company. WWD exclusively reported in January that HBC has been meeting with investors to pursue such a maneuver.

Saksfifthavenue.com generates about $1 billion in annual sales. That’s roughly twice the volume of the Mytheresa luxury website that went public in January and saw its stock price quickly soar.

Marc Metrick, who has been president and chief executive officer of Saks Fifth Avenue, will serve as CEO of the Saks e-commerce business, and a member of the company’s board of directors. HBC said strategic investments will be made to “evolve and expand” the online experience, including strengthening service, styling capabilities and data-driven personalization.

HBC also said the Saks e-commerce business will feature “a hybrid retail and marketplace platform, expanding its assortment while maintaining a curated experience.”

HBC’s governor, executive chairman and CEO, Richard Baker, said, “Luxury e-commerce is poised for exponential growth, and as a stand-alone digital company with an existing strong position in luxury, Saks is primed to win significant market share. With this move, we are redefining the luxury shopping ecosystem.…The team’s fashion expertise combined with a renewed digital focus will provide customers with an unmatched shopping experience. Furthermore, this transaction reinforces HBC’s ability to unlock significant value within our company’s assets. We are delighted to partner with Insight Partners, a firm globally recognized for its ability to scale Internet, software and e-commerce leaders.”

With Saks becoming a stand-alone e-commerce company, “We are well-positioned to make the appropriate investments to drive exponential growth and deliver the same exceptional experience online,” Metrick said. “We are energized by the opportunities that lie ahead for our customers and our vendor partners. This is a pivotal beginning of Saks’ next 100 years as a leading luxury retailer.”

Saks and SFA will work in conjunction to continue delivering a seamless customer experience. Returns, exchanges and SaksFirst credit cards will continue to be accepted both online and in stores.

Saks will lead marketing and merchandising across both businesses, while the stores will fulfill the physical functions of Saks, such as buy online, pick up in-store, exchanges, returns and alterations. Saks will retain ownership and control of the Saks Fifth Avenue intellectual property, including the brand and visual identity.

Larry Bruce has been appointed president of SFA and will report directly to Baker. Bruce has been with Saks Fifth Avenue for nearly 20 years, including the past eight years as director of stores.

Metrick said Saks e-commerce and Saks Fifth Avenue stores will maintain “a symbiotic relationship working together to provide a seamless customer experience across all channels.”

Rhône Capital, a significant shareholder of HBC, was actively involved in the transaction, HBC said.

Franz-Ferdinand Buerstedde, managing director of Rhône Capital, said he’s confident the transaction “will lead to significant value creation. The strategy to expand Saks’ e-commerce offering while continuing to serve customers through its well-positioned store locations will be mutually beneficial, and further solidify the Saks Fifth Avenue brand as the true leader in luxury retail.”

With Saks’ transition to an e-commerce business, Sebastian Gunningham will join the company’s board of directors and serve as an adviser. Gunningham was previously a member of the executive team at Amazon and led its marketplace expansion, among other large technology and operational divisions at the company. He has also held executive roles at Apple and Oracle, among other leadership roles.

Insight Partners’ managing director Deven Parekh added, “Luxury e-commerce is an exceptionally resilient high-growth sector and we are excited to invest in an iconic century-old brand that has so successfully morphed to a native digital strategy.