Hut Group shares to be priced at 500p, giving an overall valuation of £5.4bn

New Hut Group HQ

The Hut Group has today announced the offer price for its London Stock Exchange flotation this month.

Shares will be priced at 500p per share, which will give the Manchester-based online retail giant an approximate valuation of £5.4bn, which includes £920m from new shares.

In an investors’ note published yesterday (September 9), investment bank Liberum said, post-flotation, it believes THG could achieve a valuation range of between £7bn-£7.5bn.

The expected offer of approximately 374 million shares equates to a total offer size of approximately £1.87bn, or approximately 35% of the company’s shares at the time of admission.

The expected offer comprises approximately 184 million new shares to be issued by the company, raising gross proceeds of around £920m, and approximately 190 million existing shares to be sold by certain existing shareholders, raising gross proceeds of approximately £950m.

Further to THG’s announcement on September 3, Dragoneer Investment Group has entered into a cornerstone agreement with the company to subscribe for £50m of shares at the offer price, taking the aggregate commitment from cornerstone investors to £615m of shares at the offer price, consisting of a commitment of £300m from BlackRock, £100m from Janus Henderson, £90m from Merian, £75m from QIA and £50m from Dragoneer.

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

A pricing statement is expected to be published on, or around, September 16, with conditional dealings in the shares expected to start on the London Stock Exchange 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 begin on, or around, September 21.

Matthew Moulding

The Hut Group was founded in 2004 by Matthew Moulding and John Gallemore.

Burnley-born Moulding studied industrial economics at the University of Nottingham before going on to qualify as a chartered accountant. His father was a tarmac contractor and his mother was an antiques trader.

He went on to work at phone company the Caudwell Group, where he became finance director of the distribution business, working directly with John Caudwell.

Moulding launched The Hut Group with a £500,000 investment – inspired by buying a CD online – with a focus on entertainment products such as music and gaming.

He persuaded former Tesco chief executive Sir Terry Leahy and M&S boss Sir Stuart Rose to become early investors, and within three years the business was breaking even.

The Hut Group originally created white-label websites for large physical retailers.

These included ASDA, Argos Entertainment, Tesco and WHSmith.

By 2009 it had topped the Sunday Times Tech Track 100 league table.

It embarked on a series of brand acquisitions and in 2014 began construction work at Omega, in Warrington on a one million square foot logistics and manufacturing operation.

Further brand acquisitions followed, including Hale Country Club and Spa in 2016, then, in 2018, its international expansion took off with the opening of an 800,000 sq ft fulfilment and manufacturing centre in Poland, coinciding with its success in the Queen’s Award for Enterprise International Trade category.

Last year it started building THQ and THG ICON, a $1bn office and studio development next to Manchester Airport.

THQ will span 280,000 sq ft and provide up to 10,000 jobs, while ICON, its content creation studio, will cover more than 11.6 acres with, in excess of, 2,000 staff.

The Hut Group is now one of the world’s largest online retailers in beauty and nutrition powered by THG Ingenuity, its all-in-one growth platform combining ecommerce tech, hosting, translation, and a complete fulfilment infrastructure.

The group trades in 169 countries, dealing in 31 languages and 39 currencies.

Shareholders include Old Mutual Global Investors, BlackRock Funds, Sofina, Merian Chrysalis Investments, Balderton and Kohlberg Kravis Roberts & Co.