THG, formerly known as The Hut Group, is an e-commerce business based out of the United Kingdom
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British e-commerce company Th.G said on Tuesday that it wants to spin off its technology platform, Ingenuity, in a blow to founder Matthew Moulding’s vision to create a major publicly listed UK technology name
THG, which was previously known as The Hut Group, said in an investor briefing on Tuesday that it was “actively undertaking detailed work to review potential structures to facilitate the spin-off of THG Ingenuity”.
“At this stage no certainty can be provided on a delinking timetable while we consider options to achieve this outcome, however, the structural tax clearances have now been approved by HMRC,” the UK tax authority added, THG.
Any proposed demerger would require shareholder approval, the company said, adding that further information on its proposed demerger would be provided to shareholders in due course.
If and when the demerger is approved, the THG group company will consist of only the THG Beauty and THG Nutrition divisions. The company believes this will simplify its structure and help investors better understand the business.
Shares of THG fell about 10% in morning trading on Tuesday.
THG created THG Ingenuity in 2021 as a separate business that sells e-commerce solutions for retailers. THG’s Molding has previously described THG Ingenuity as a “social media influencer platform” to promote products, including brands sold by THG as well as those sold by other companies.
The venture was created with the help of heavily invested Japanese technology SoftBankwhich in May 2021 bought an 8% stake in THG for £481m. The deal at the time gave SoftBank the option to invest an additional $1.6 billion in THG Ingenuity.
However, in October 2022, SoftBank terminated its investment agreement with THG and sold its entire stake in the company to Moulding.
Pushing for FTSE index inclusion
In addition to pursuing a spinoff for the Ingenuity arm, THG also plans to transfer all of its currently London-listed shares to its newly formed equity trading companies (ESCC) division.
Previously, THG was listed on the standard section of the LSE. However, companies listed in this stock market category are not eligible for inclusion in major stock indices such as the FTSE 100.
After tech executives and investors bemoaned the structure of London’s IPO market, officials from the LSE, the UK government and the Financial Conduct Authority teamed up to reform London listing rules and make the stock exchange a more attractive place for high-growth tech companies .
Earlier this year, FCA introduced the ESCCamong other changes, as part of wider reforms to Britain’s import environment.
THG said the new listing structure for the company would enhance its chances of being considered for listing on UK stock indices and, in turn, improve passive investment flows and liquidity for the company’s shares.
THG competes in the public market
THG has struggled to return its stock value to the monster highs of the tech rally of 2020 and 2021, when investors poured cash into businesses taking advantage of stay-at-home trends and a broader long-term shift to online shopping.
Shares hit an all-time high of £800 per share in December 2020.
Today, they trade at £57.65, a fraction of what they were worth at the height of the Covid-led boom in tech and e-commerce stocks.
Alongside the company’s struggles with the market, Molding has been a prominent critic of the London market for tech listings, telling GQ Magazine in 2021 that THG’s IPO “dragged from start to finish” and was ultimately a “mistake”. .
He also said at the time that it would be better to release THG in the US rather than the UK
