Yahoo Finance SoftBank gives Hut Group £1.6bn boost
The Japanese technology powerhouse Softbank has become a major shareholder in The Hut Group (THG), in a deal that catapults the Manchester make-up and protein shakes retailer onto the global stage.
After the stock market closed on Monday, Softbank was unveiled as the cornerstone backer of a $1bn (£710m) fundraising intended to fuel THG’s growth.
The prolific investor will pump more than £500m into a deal that THG chief executive Matt Moulding said would allow him to “invest aggressively” and unlock partnerships with other Softbank companies around the world.
THG also plans to spin-off its fledgling Ingenuity arm, which aims to rent out its online retail and logistics infrastructure to third parties, as a separate subsidiary in which Softbank may also invest.
The arrangement grants Softbank the right but not the obligation to acquire 20pc of Ingenuity for $1.6bn, implying a valuation of $6.3bn. The figure is equivalent to more than three quarters of THG’s overall stock market valuation before the announcement. Ingenuity accounted for less than a tenth of THG’s £1.6bn turnover last year.
Mr Moulding said: “Softbank allows us to super-accelerate the prospects of Ingenuity.”
The fundraising threatens to anger small shareholders, who will not get the chance to participate and face having their stakes diluted.
For listed companies on the stock market’s premium segment, so-called pre-emption rights protect existing investors by guaranteeing their ability to buy newly issued shares. However, when it made its debut in September Hut Group pursued a standard listing, which does not provide the same safeguards and excluded it from the FTSE 100.
Mr Moulding said that as its largest shareholder “I’ll take the biggest dilution”. He and his wife own 319m shares and have a 25pc stake worth £2.2bn before the placing, which was due to be completed before the stock market opens on Tuesday.
Hut Group said it had consulted major shareholders on its deal with Softbank. It added: “The consultation has confirmed the board’s view that, given the current market environment, the placing and the subscription are in the best interests of shareholders in THG.”
Sofina, an existing shareholder with board representation, will also invest $85m in the placing. The Belgian investment group is controlled by the billionaire Boel family. Alongside the fundraising, THG revealed its latest acquisition, of Bentley Laboratories, an American beauty brand, for $255m.
It marks the latest step of rapid expansion by THG, which was founded by Mr Moulding in 2004 as an online retailer of CDs and DVDs. More recently it has focused on its brand for gym-goers, Myprotein, and cosmetics via digital shopfronts including Lookfantastic, all promoted on Instagram.
Mr Moulding declined “out of respect” to name the other Softbank-backed companies with which THG aims to collaborate. The investor is a shareholder in the viral video app TikTok, the office space provider WeWork and Indian online grocer Flipkart, among dozens of bets placed on emerging ventures by its mercurial founder Masayoshi Son and his lieutenants. Softbank has become an up to 9pc shareholder in THG, ranking it in the top five or six, Mr Moulding said.
