Importance Score: 45 / 100 🔵
Beauty Retail Group THG Secures £90 Million in Funding Round Led by Founder Matt Moulding
Manchester-based e-commerce giant THG, owner of prominent beauty retailers Lookfantastic, Dermstore, and Christophe Robin, has confirmed a successful fundraising round, securing over £90 million. The capital injection sees a significant two-thirds contribution from THG founder Matt Moulding, underscoring his continued commitment to the group.
Funding Details and Founder’s Investment
The announced equity raise comprises a £68 million convertible loan facility and £22 million generated from the placement of new shares priced at 32.3 pence apiece. Matt Moulding, who established THG, initially known as The Hut Group, in collaboration with John Gallemore in 2004, has pledged to invest £60 million of his personal funds into the company.
In a recent social media post, Moulding, originally from Burnley, drew parallels between business leadership and parenthood, stating his dedication to THG, much like a parent supporting their child.
Debt Reduction Strategy
THG intends to allocate the newly acquired £90 million, in conjunction with existing company reserves, towards reducing its gross debt obligations. At the close of the previous fiscal year, these debts totaled approximately £686.2 million.
Specifically, the online retail group plans to facilitate an early repayment of a £109 million Term A loan and implement a reduction of a Term B loan by €125 million, bringing the outstanding balance to €475 million.
Loan Maturity Extension
On Monday, THG unveiled its strategy to extend the maturity date of the aforementioned Term B loan to December 2029. Additionally, the company seeks to prolong its £150 million revolving credit facility to May 2029, these measures aimed at diminishing financial leverage.
THG stated that this financial restructuring ‘signifies another important advancement in THG’s streamlined debt and equity profile, reinforcing its position as a cash-generating global retailer and brand proprietor, well-prepared to capitalize on its forthcoming development phase within expanding consumer markets.’
Background and Market Performance
Initial Public Offering and Subsequent Challenges
The FTSE 250-listed entity’s £5.4 billion initial public offering (IPO) in 2020 marked a record as the largest technology firm listing on the London Stock Exchange. However, the company encountered headwinds in the following year. Easing Covid-19 restrictions led to a decrease in online sales growth, persistent losses, and increasing corporate governance concerns pertaining to Moulding’s ‘golden share’ arrangement.
Moulding has previously expressed regret over the IPO experience, describing it as overwhelmingly negative and indicating a preference for a New York listing over London.
Reflecting on the company’s London Stock Exchange experience in his recent social media communication, Moulding noted that despite listing 4 ½ years prior, it had not been financially beneficial for him or his family. He highlighted his increasing personal investment in THG shares, projecting £110 million in purchases within a five-year period.
Turnaround Initiatives
In recent years, Moulding has actively pursued a turnaround strategy for THG. This has involved reducing acquisition activity, relinquishing his ‘golden share’ to address investor apprehensions, and divesting the underperforming Ingenuity division.
To support the financial aspects of the Ingenuity separation, Moulding contributed £10 million to THG in October as part of a broader £95 million fundraising initiative.
Furthermore, THG has forged partnerships with prominent retail entities, including supermarket chain Iceland, Sports Direct parent company Frasers Group, and health and wellness retailer Holland & Barrett.
Frasers Group has recently accumulated a 5 percent stake in THG, adding to its portfolio of investments in consumer-facing businesses facing challenges, such as ASOS, Boohoo, and Mulberry.
Current Share Value
THG shares experienced a slight increase of 0.4 percent to 35 pence in mid-day trading on Thursday. However, this represents a significant 93 percent decrease from their IPO listing price of 500 pence.
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