Hut Group now valued at £5.4bn as IPO prices at £5

Matthew Moulding, The Hut Group founder and CEO

Manchester-based consumer brand and e-commerce giant The Hut Group (THG) on Thursday priced its initial public offering (IPO) of stock at £5 per share, which implies a market capitalisation of £5.4 billion on admission to the London Stock Exchange.

In addition to the £920 million of new shares that THG had already announced it would sell, existing shareholders are offering another £950 million of shares.

“The expected offer of approximately 374 million shares equates to a total offer size of approximately £1.87 billion, or approximately 35 per cent of the company’s shares at the time of admission,” said THG.

The Hut Group, which employs more than 7,000 people, runs websites including lookfantastic.com, myprotein.com, espaskincare.com and coggles.com that sell beauty and nutrition products.

THG’s current shareholders include CEO and founder Matthew Moulding and other executives plus institutional shareholders that include KKR, BlackRock, Old Mutual, Sofina, Balderton Capital and Merian Chrysalis Investments.

Other backers of THG have included former Tesco chief executive Terry Leahy, former Matalan boss Angus Monro and Scottish entrepreneur Tom Hunter.

CEO Moulding will have a 25.1% stake in THG after the IPO, making him a billionaire.

Moulding will retain a “golden” or “founder” share in THG that will give him the power to veto any hostile takeover attempt for three years.

However, that arrangement means The Hut Group will not meet the required corporate governance standards for a “premium” listing on the London Stock Exchange — and therefore the company will be ineligible for inclusion in benchmark indexes such as the FTSE 100.

THG added in its stock exchange statement: “Further to THG’s announcement on 3 September 2020, Dragoneer Investment Group, LLC has entered into a cornerstone agreement with the company to subscribe for, subject to certain conditions, £50 million of shares at the offer price, taking the aggregate commitment from cornerstone investors to £615 million of shares at the offer price, consisting of a commitment of £300 million from BlackRock, £100 million from Janus Henderson, £90 million from Merian, £75 million from QIA and £50 million from Dragoneer …

“Immediately following admission, the company intends to have a free float of at least 20 per cent. of the company’s issued share capital …

“The pricing statement is expected to be published on or around 16 September 2020, with conditional dealings in the shares expected to commence on the London Stock Exchange at 8.00 a.m. on the same day.

“Admission of the company’s shares is expected to occur and unconditional dealings in the shares on the London Stock Exchange are expected to commence on or around 21 September 2020 …

“THG has engaged Citigroup Global Markets Limited, J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove, Barclays Bank PLC and Goldman Sachs International as joint global co-ordinators, and HSBC Bank plc, Jefferies International Limited and Numis Securities Limited as joint bookrunners.

“N.M. Rothschild & Sons Limited is acting as the sole financial adviser to the company.”