THG's Moulding gives up 'golden share' after stock tumbles
THG said in May it planned to spin off the division into a separate company, with SoftBank having an option to inject a further $1.6 billion into Ingenuity at a valuation for the tech business of $6.3 billion. With the stock down 63% year to date, the group has a market value as a whole of $4.85 billion.
THG, a rapidly growing British online retailer and tech group that is backed by SoftBank, said on Monday it would give up its founder's "golden share" and seek a premium listing after its shares plummeted last week. THG was rocked by a 35% share price collapse following an underwhelming investor presentation, forcing it to address corporate governance concerns more broadly.
Having delivered a bumper initial public offering last September, it has set out plans to spin off and list different parts of the business, prompting some investors to question the overall strategy, and its value. The move to drop the founder's special share will be closely watched in Britain where regulators are expected to soon allow companies with dual class share structures to access its top tier share indices in a bid to attract more tech companies.
"After the anniversary of our 2020 listing we feel that the time is right to make this next step and apply to the Premium segment in 2022, thereby continuing the development of THG," CEO Matthew Moulding said. Analysts at Jefferies said the move showed a willingness to engage on shareholder concerns, but that ultimately it would be strong trading and progress on the e-commerce front that would deliver a rebound in its valuation metrics.
Its shares rose 8% in early trading. A seller of beauty and nutrition products that also runs an e-commerce and logistics arm for partners, THG was hit after it gave an investor presentation on its e-commerce technology and operating platform Ingenuity.
Analysts said they were disappointed by the lack of financial detail provided. THG said in May it planned to spin off the division into a separate company, with SoftBank having an option to inject a further $1.6 billion into Ingenuity at a valuation for the tech business of $6.3 billion.
With the stock down 63% year to date, the group has a market value as a whole of $4.85 billion. The group, which owns beauty retailer Lookfantastic, makeup brand Illamasqua, beauty box service Glossybox and supplements firm Myprotein, has also said it plans to separate and list its beauty business next year.
The company will be hoping that the move to a more traditional corporate structure will start to assuage some of the concerns. Britain's Financial Conduct Authority (FCA) has proposed allowing dual class share structures for "innovative, often founder-led companies" for the first five years of a listing on the LSE's premium segment.
Dual class share structures allow company founders to maintain control at the expense of ordinary shareholders and are popular in New York and Amsterdam, the EU's top share-trading centre. They are already available in London on the standard segment, but shareholder rights groups who back "one share, one vote" oppose their introduction on London's premium segment where top companies list.
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