THG, formerly known as The Hut Group, is a UK-based e-commerce business
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British e-commerce company third harmonic It said on Tuesday it was looking to spin off its technology platform Ingenuity, dealing a blow to founder Matthew Molding’s vision of building a major listed technology company in the UK.
THG, formerly known as The Hut Group, said in an investor update on Tuesday that it was “actively undertaking detailed work to review potential structures to facilitate the demerger of THG Ingenuity.”
THG added, “At this stage we are unable to confirm a timetable for the demerger while we consider options to achieve this outcome, however the tax settlement structure has now been approved by HM Revenue and Customs (HMRC).”
Any proposed spin-off would require shareholder approval, the company said, adding that more information on the proposed spin-off of the business would be provided to shareholders in due course.
If the spin-off is approved, THG Group of Companies will consist solely of the THG Beauty and THG Nutrition divisions. The company believes this will simplify its structure and help investors better understand the business.
THG shares fell about 10% in early trading Tuesday.
THG launched THG Ingenuity in 2021 as an independent business selling e-commerce solutions to retailers. Forming of THG THG Ingenuity has been described before Serves as a “social media influencer platform” to promote products, including brands sold by THG and brands sold by other companies.
The joint venture was formed with help from Japanese tech investment giant SoftbankIn May 2021, the company acquired an 8% stake in THG for £481 million. 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 all its shares in the company to Molding.
Promote inclusion in the FTSE Index
In addition to seeking to spin off its Ingenuity unit, THG also plans to transfer all of its currently publicly traded shares to the London Stock Exchange’s newly created Equity Commercial Corporation (ESCC) unit.
Previously, THG had been listed on the Standard Segment of the London Stock Exchange. However, such companies listed on the stock exchange are not eligible to be considered for inclusion in major blue chip indices such as the FTSE 100.
Officials from the London Stock Exchange, the British government and the Financial Conduct Authority are working together to reform London’s listing rules to make the exchange more accessible to high-growth technology companies, after tech executives and investors expressed dissatisfaction with the structure of the London IPO market. Attractive place.
Earlier this year, FCA Introducing ESCCThe changes are part of a wider overhaul of the UK listing environment.
THG said the company’s new listing structure will increase its chances of being considered for inclusion in UK stock indexes, thereby improving passive investment flows and liquidity for the company’s shares.
THG’s public markets are in trouble
THG has been struggling to return its shares to the huge highs of the tech rally in 2020 and 2021, when investors poured cash into the business, benefiting from stay-at-home trends and a secular shift to broader online shopping.
In December 2020, the stock hit an all-time intraday high of £800 per share.
Today they trade at £57.65, a fraction of their market capitalization at the peak of the coronavirus-fueled boom in tech and e-commerce stocks.
Modine has been a prominent critic of London’s tech listings as the company battles the market, telling GQ magazine in 2021 that THG’s IPO was “terrible from start to finish” and ultimately a ” mistake”.
He also said at the time that it would be better for THG to be listed in the United States than in the United Kingdom.
