Alliance Textiles subsidiaries Swanndri and Royal Wools have been purchased in a multi-million dollar management buyout.

With the backing of private investors, senior Alliance managers Julian Bowden and Gerard Kilpatrick bought the two apparel brands for an undisclosed sum.

The new company, Swanndri New Zealand Ltd, will have a sales and marketing base in Christchurch and continue to manufacture at a plant in Timaru.

It is expected to employ between 35 and 40 people and have an annual turnover of about NZ$10 million.

According to chairman George Cowper, the newly formed company had "huge potential" for export growth.

"I am confident that the intrinsic value of this brand, combined with the credentials and strength of the staff, management team and board of directors, will be the essential elements in the company's success," he said.

Swanndri is believed to be the oldest apparel brand in New Zealand, with a history dating back to 1913.