Manchester-based retailer THG plc is pushing ahead with its plan to demerge its fulfillment division Ingenuity and said it planned to raise £75 million to help the new standalone firm move towards profitability.
Under the plans announced on Thursday, Ingenuity will be demerged into a standalone, independent, private entity, leaving THG consisting of its Beauty and Nutrition units.
To facilitate the demerger, THG said it is aiming to raise about £75 million from equity investors, with additional proceeds from selling shares to retail investors.
THG CEO Matthew Moulding said he would invest £10 million in the equity raise, with additional indications received from other long-term shareholders including Sofina, Mark Evans, Sir Terry Leahy, West Coast Capital and Brian Kennedy, amounting to about £33 million of the targeted £75 million equity raise.
THG said the funds, along with Ingenuity taking on some debt, would give the newly independent firm “sufficient medium-term funding as the business approaches positive cash generation on a standalone basis.”
At the same time, THG announced a separate sale of shares to retail investors, up to a value of 8 million euros (£6.7 million).
For its third quarter, THG said sales at its Beauty unit rose 2.3% while Nutrition sales fell 13.1%. Ingenuity’s overall sales, to both external customers and THG’s other units, fell 8.2%.
Looking forward, THG said the second half of the year remains the group’s most profitable and cash generative period, with the board expecting full-year performance to be within the e company consensus range.
“Seasonal weighting and continued revenue growth in Beauty and Ingenuity gives us confidence in the outturn, albeit we continue to monitor FX movements (Japanese Yen c.£7m ytd impact) and rising whey prices,” the company said.
CEO Moulding said: “Today we have separately announced significant progress on our strategy to demerge THG Ingenuity into a private company supported by major shareholders. THG PLC will remain a listed leading consumer brands group, with our planned transfer to the ESCC well on track.”
“It was especially pleasing to see another solid quarter of delivery from both our Beauty and Ingenuity businesses, rewarding the significant overhaul of their respective operating models during 2022 and 2023. The short-term disruption from the major rebrand of Myprotein is now behind us, and we were pleased that in September Nutrition delivered its best sales performance since January.
“Preparations for our busiest trading period are well advanced with efficiencies across the network over the last twelve months delivering further benefits for our Ingenuity clients to aid new customer acquisition.”