LONDON — Are THG’s days on the London Stock Exchange numbered?
Shares in the The Hut Group, now known as THG, rose further on Monday following a report on Friday in the Betaville blog that Advent International, Leonard Green & Partners and Apollo are interested in taking a stake.
It said Advent is already working with advisers from Goldman Sachs and THG’s cofounder Matthew Moulding.
Over the weekend, British media later embellished on the report, speculating that if private equity does invest, they could potentially delist THG, only to relist it in the U.S., where the markets are forgiving of high-growth tech companies with low profitability.
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Sales are rising in the double digits, and while the company is still loss-making, it is profitable at an EBITDA level. In the third quarter ended Sept. 30 group revenue was 507.8 million pounds, 94 percent higher than the corresponding period in 2019 at constant currency.
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THG declined to comment on the speculation, as did Advent and Apollo. Leonard Green did not return a request for comment at press time.
On Friday, the shares climbed 16 percent following the original report. On Monday, after a day in the doldrums, the shares surged 3.9 percent to close at 1.41 pounds.
THG’s shares have fallen some 82 percent over the past year due to a cocktail of corporate governance woes, confusion about the value of the company’s end-to-end Ingenuity platform and cofounder Matthew Moulding’s roles as chairman, chief executive officer and main landlord at THG.
As reported, Moulding has been making changes, giving up his “golden” share (and veto powers) in a bid to attract blue chip investors and relinquishing his chairman’s role. THG has already begun the process of appointing an independent non-executive chair.
The company also plans to make its burgeoning portfolio more transparent so that investors know exactly how much money each division generates.
As reported, it plans to seek a separate stock market listing for its beauty division, although it has not yet decided what to do with its other subsidiaries, such as nutrition and Ingenuity. THG said it is committed to remaining long-term shareholders in its various businesses.
Leonard Green hasn’t had much luck with U.K. businesses of late — at least the lifestyle ones.
In 2019, after seven years, Leonard Green and Sir Philip Green called time on their Topshop/Topman partnership. Leonard Green sold its 25 percent stake in Topshop/Topman back to parent company Arcadia Group for a reported price of $1.00.
The sale of the 25 percent stake back to Arcadia came amid Philip Green’s plan to restructure the retail giant. The company later fell into administration, and Topshop was sold to Asos last year.
Philip Green and Leonard Green had inked their deal in late 2012, and their plan was to generate $1 billion in revenue from the Topshop and Topman brands in the U.S. and to double the brands’ worldwide sales over the next three to four years.
The deal valued Topshop and Topman at $3.22 billion. The partners never reached their target, although they did successfully expand both brands at Nordstrom, where they continue to be sold.