THG split latest – Moulding chips in cheeky £10m as Ingenuity raise tops £95.4m
THG has raised £95.4 million from new investors and existing shareholders in its bid to fund the break up of the group, and secure a new life as a private company for the ecommerce engine Ingenuity.
The company has revealed that “existing long-term and institutional shareholders” contributed approximately £50 million to the fundraise, led by Moulding, CEO and founder of THG, who invested £10 million in the fundraise.
The fundraising now enables THG, which consists of the Beauty and Nutrition divisions, to become “a cash generative global consumer beauty and nutrition group, with an improved balance sheet, capex and cashflow profile.”
The fundraising comes after THG revealed a 5.2% drop in group sales to £442.8m in the three months to September 30, with growth in its beauty arm and Ingenuity arm offsetting a 10.5% fall in Nutrition.
But in a surprise twist to the never dull story of THG’s life on the markets, a £10m strategic investment from retail tycoon Mike Ashley’s Frasers Group sees links between the two colourful boardroom characters deepen, which THG claims is “further underscoring their commitment to its multi-year strategic partnership with THG”.
In June 2024 Frasers agreed to stock a range of Myprotein products at Sports Direct and to link THG customers to their own affinity scheme.
The £10 million investment from Frasers is in addition to approximately £75 million of net proceeds raised to provide IngenuityCo with sufficient medium-term funding.
Also backing Moulding are Sofina and West Coast Capital and private investors Mark Evans, Sir Terry Leahy and Brian Kennedy.
The task for the businesses will now be for Ingenuity to stand on its own as an ecommerce engine competing with Shopify, Ocado and WooCommerce in offering services to corporate customers.
In 2023 THG Ingenuity generated £673.9 million in sales, of which £154.1 million was from external (i.e. non-THG) clients and £9.0 million of adjusted EBITDA.
So while the demerger simplifies THG Beauty and THG Nutrition, basically as retail ecommerce businesses without the burden of reinvesting profits and cashflow into Ingenuity’s technology capex requirements.
It is expected that Ingenuity’s existing executive team, including Chairman Alistair Crane and CEO Richard Ward, will remain with IngenuityCo following the demerger.
Further work is ongoing to design the appropriate governance framework for IngenuityCo. Separately, THG’s now well-established related parties committee chaired by Sue Farr, Senior Independent Director of THG will, following the demerger, will be responsible for overseeing transactions between THG and and IngenuityCo.
Arms-length contracts between Ingenuity and each of Beauty and Nutrition have been in place since 2022, and will be expected to continue to operate post separation in the same manner as they do today. Ingenuity would have no recourse to THG post demerger.
Activist investor Kelso, a long standing critic of THG’s strategy, has also expressed support for the demerger of Ingenuity.
In a statement minutes after THG’s announcement at close of market yesterday Kelso said in a statement: “Kelso believes in Ingenuity’s model and its long term future and that the demerger will be highly beneficial for Ingenuity, as well as for THG Beauty and MyProtein as the remaining parts of THG.
“Kelso believes that the value of the two remaining businesses are each worth more than the current market capitalisation of THG.
“Kelso is also supportive of the placing announced today and pleased with the board’s speed of execution and decisive action. Kelso intends to participate in the placing.”
