The Hut Group raises £1.88bn in largest UK flotation since 2015

The Hut Group (THG) has raised £1.88bn, making it the largest ever technology IPO and the largest UK flotation since 2015.

Manchester-based online retail giant THG announced an offer price of 500p per share earlier this month for its long-predicted independent public offering.

Following the successful completion of the bookbuilding process the business is now valued at £5.4bn.

And in early trading the stock surpassed the initial pricing, opening at 600p before hitting 658.30p per share at one stage, before settling back to trade around 630.90p shortly after 9.30am this morning.

The offer comprised 376,273,998 shares, or approximately 35% at the time of admission of the aggregate of the company’s shares and all shares in the company.

This includes 184,000,000 new shares to be issued by the company, raising gross proceeds of £920m.

The start of conditional dealings on the London Stock Exchange took place at 8am this morning, under the ticker THG, meaning only investors who applied for, and were allocated, shares in the offer will be able to deal in the shares on a conditional basis.

Admission to the standard listing segment of the official list of the FCA and to trading on the main market of the London Stock Exchange, and the start of unconditional dealings, is expected to take place at 8am on September 21.

Matthew Moulding, founder, chief executive and chairman of THG, said: “I am delighted that THG has received such strong support from some of the world’s largest investors, which means we have been able to achieve a highly successful offer of shares in the company.

“The results of the offer are a clear validation of our business model, significant growth prospects, and recognition of the hard work and talent of all our colleagues.

“Our flotation is the start of an exciting new phase in THG’s development and we look forward to sharing that journey with our new shareholders.”

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “E-commerce play The Hut Group has enjoyed a successful start to life as a public company – rising sharply on its debut as it chalks up the largest IPO in the UK since 2015.

“While this might say more about how dormant the UK market has been in recent years than it does about The Hut, it nonetheless reflects strong appetite for the story with lots of fund managers clamouring to get a piece of the action at the 500p issue price.

“A slightly pick and mix collection of assets and businesses probably best known for its Lookfantastic site – which sells beauty products and cosmetics online – The Hut owns its own brands, websites, warehouses and delivery network (as well as some hotels and a gym).

“Much of the excitement around the stock surrounds its Ingenuity e-commerce fulfilment platform. In the same way Ocado’s online groceries solution is sold to third party supermarkets, The Hut is signing up the likes of Nestle and Proctor & Gamble to Ingenuity and this is seen as the big growth opportunity for the business.

“The company is investing heavily to achieve this growth and, like Ocado, remains loss-making on most metrics for the time being.

“Eyebrows have been raised over some governance issues attached to the stock, including the fact management are incentivised on share price performance.

“In addition the limited free float and founder share held by Matthew Moulding prevent the shares from qualifying for inclusion in FTSE indices.”