GLASGOW dress hire group ACS Clothing is to invest £3.5 million in a new headquarters in Lanarkshire after being persuaded against moving south of the Border by a £250,000 grant from Scottish Enterprise.

ACS, the largest dress hire group in Europe, rents out kilts, tuxedos and other men's formal wear through a network of about 800 retailers, including high street names like Debenhams, Slaters and Burtons.

It currently operates from warehouses in Baillieston, to the east of Glasgow, and Manchester following its 2011 takeover of rival Etiquette Formal Hire. It was threatening to move south, jeopardising the jobs of about 100 Scottish employees. Following the decision of Scotland's enterprise agency to extend the company its second £250,000 grant in eight years, it will now close both warehouses and move its headquarters to Eurocentral in Lanarkshire.

With backing from Clydesdale Bank and Lombard, it will invest the money in garment sortation equipment to improve efficiency, and several mezzanine levels to increase space.

The warehouse will stock about three million garments, in a move that is expected to create a handful of new jobs.

Richard Freedman, managing director of ACS, who was the Ernst & Young Scotland Young Entrepreneur of the Year eight years ago, said there would be no redundancies, since the company currently only uses its Manchester facility for storage.

"We are safeguarding the jobs and becoming a lot more efficient," he said. "Once we've found our feet, we'll be looking to expand overseas."

He added: "For the first time in years, wedding numbers have started to rise. Formal hire is becoming increasingly popular as brides want the wedding party to look the same, including the ushers, the best man and groom.

"The prom and student business is good too. The black-tie business is not so good, but weddings are very much the main thing and we see an opportunity to keep expanding."

The company's roots go back to the early 1970s, when Freedman's father, Joe, set up two clothing stores in Glasgow – Mr David and Gilt-Edged, the latter of which is still run by ACS in the city's Saltmarket area.

ACS moved into wholesaling in 1998, originally focusing on kilts and then moving into suits and other dress hire in the mid-2000s. In its most recent financial year, ended May 31 2011, it pre-tax profits increased 20% to £1.2 million on a 14% rise in turnover to £8.3m. Much of the growth was from adding Etiquette to the accounts.

Freedman is also a director of Xedo Software, which supplies software to bridal companies and is also based in Baillieston. It is led by Raymond O'Hare, the former Scottish head of Microsoft.

Eleanor Taylor, director of business support at Scottish Enterprise, said: "We've made a formal offer of £250,000 in Regional Selective Assistance support to ACS Clothing to support its growth plans. We look forward to working with the company as it continues on its growth journey."