Shares of Manchester-based consumer brand and e-commerce giant The Hut Group (THG) soared as much as 30% in the company’s first day of trading on the London Stock Exchange (LSE) on Wednesday as it successfully completed its £5.4 billion initial public offering (IPO).
The Hut Group is the latest big tech firm from the North of England to complete an IPO in recent years, following companies such as Team 17, Sumo Digital and Blue Prism.
Investors shrugged off concerns about The Hut Group’s corporate governance structure as the Manchester firm sold 376 million shares at £5 each to raise £1.88 billion.
The IPO raised £920 million for the company and an additional £961 million for existing shareholders as private equity group KKR sold its entire shareholding.
THG’s shareholders include CEO and founder Matthew Moulding and other executives plus institutional shareholders that include 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.
The unusual structure of The Hut Group’s IPO has raised some concerns among corporate governance watchers.
Moulding will remain both chairman and chief executive of the company, while the firm’s shares are to be issued in different “classes”, allowing Moulding voting powers that are vastly superior to most London-listed companies.
The Hut Group’s corporate governance structures meant the firm had to pursue a “standard” rather than “premium” listing and that it will not be eligible for the FTSE 100 despite being big enough for the index.
The LSE said: “THG have chosen to list on the Standard Segment which provides European-equivalent listing standards for over 250 companies, a quarter of all the companies listed on Main Market.”
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.
The LSE said: “UK tech company THG opened London’s markets for trading today, celebrating their listing on London Stock Exchange’s main market.
“The global ecommerce technology platform raised £1.88 billion pre greenshoe, the market capitalisation at IPO was £5.4 billion.
“The listing of THG is the largest ecommerce IPO in Europe to date and the second largest tech listing on London Stock Exchange to date …”
The LSE said The Hut Group is the “largest ecommerce listing in Europe, by capital raised, ahead of AO World (£487 million, February 2014) and Zalando (£411 million, October 2014) …”
The exchange said The Hut Group is the “largest tech IPO in London based on market capitalisation of company at listing (£5.4 billion).”
And the LSE said THG is the “second largest tech IPO in London by capital raised (£1.88 billion), after Worldpay (£2.5 billion, October 2015).”