Jan Cameron, the founder of the Kathmandu Holdings retail chain, has invested A$20 million in rival retailer Macpac after a five-year non-compete agreement expired last month, the Australian Financial Review reported.

Shares of Kathmandu fell 0.5% to $2.19 on the NZX. Cameron set up the company in 1987, selling the chain in 2006 for about $275 million to private equity firms. It has since been floated on the NZX and ASX.

"We believe KMD is well placed to compete against Macpac and others given its strong brand with growing awareness, investment in product development and range expansion, major economies of scale, and an extensive and growing high quality store network," said Buffy Gill, retail analyst at Goldman Sachs & Partners.

She maintained her 'buy' recommendation Kathmandu and a 12 month target price of $3.10.

Goldman Sachs helped manage Kathmandu's initial public offering.