By Dominic Chopping

STOCKHOLM--Swedish investment firm Girindus Investments AB said late Thursday that it has sold a 6.25% stake in clothing-recycling company Renewcell AB to a group of investors including Hennes & Mauritz AB.

Girindus said it sold 1.9 million shares, corresponding to around 6.25% of the shares in Renewcell, at 226 Swedish kronor ($24.94) a share to investors including H&M, Swedbank Robur Fonder, Handelsbanken Fonder and AMF Fonder.

Following the sale, Girindus remains the largest shareholder in Renewcell with a 12.77% stake through its Girincubator AB subsidiary, while H&M increases its stake to around 11.51% and maintains its position as the second largest shareholder.

Renewcell, listed on Nasdaq First North Premier Growth Market, has developed technology that dissolves used cotton and other cellulose fibers and converts them into a biodegradable raw material called Circulose pulp, which can then be used to make new clothing.

"As a long standing partner and investor in Renewcell we're happy to continue supporting this game changing technology," said Erik Karlsson, acting head of H&M's investment arm H&M CO:LAB.

"Renewcell has taken a leadership position in the circular textile industry and we look forward to creating new and sustainable collections together in the coming years," Mr. Karlsson said.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

12-10-21 0350ET