THG placing sees high demand as SoftBank-backed tech spin-off is mulled over

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THG PLC (LON:THG) upsized a share placing to raise US$320mln, up from US$270mln, which is just one part of major new investment in the e-commerce group.


An additional 6mln shares were sold to investors in the placing following strong demand, with a total of 38mln new shares are now being sold at 596p each.


On Monday, the company said it would raise US$1.05bn of new capital through a share placing and a parallel subscription deal with SoftBank Group, which is separately pledging up to US$1.6bn for a stake in the Manchester firm’s technology business.


SoftBank is subscribing for US$730mln THG shares via a subscription for 86.6mln new shares issued at 596p, to raise US$730mln.


The new THG equity issued in the placing and subscription equates to around 9.98% of the company’s enlarged share capital.


THG earmarks the new capital as an acquisitions war chest to seize opportunities in the wake of the pandemic and to expedite its digital-first retail operation, particularly in the ‘prestige beauty’ area. To that end, it concurrently announced a US$255mln deal to acquire Bentley Laboratories LLC, a New Jersey based developer and manufacturer of skincare and haircare products.


Beauty is seen as a priority among THG’s retail verticals, which also include nutrition and wellness through the MyProtein brand and a number of fashion website brands.


Tech spin-off


The company on Monday announced the deal with SoftBank which includes a collaboration agreement for the THG Ingenuity business and an option to invest US$1.6bn into the Ingenuity unit which is being separated into a new subsidiary.


THG Ingenuity is the ‘direct-to-consumer’ e-commerce technology that lies beneath the group’s basket of growing retail websites. The new subsidiary will comprise the company’s Ingenuity platform IP and the Ingenuity operating trade and assets.


SoftBank will own 19.9% of the unit through the collaboration deal, if the option is exercised, which would give the newly separated entity an enterprise value of US$6.3bn.


In Monday’s statement, THG said it retains the discretion to separate THG Ingenuity by way of an IPO, sale process, or other structural options.


More broadly, it is conducting a review to establish the optimum structure for the separation of THG Ingenuity, THG Beauty, THG Nutrition and THG OnDemand as the company seeks to maximise value for all stakeholders.


Chief executive Matthew Moulding, in a statement, said: “We are delighted to announce this financial and trading partnership opportunity with SoftBank, one of the world’s leading technology investors, recognising both the capability and inherent value of our proprietary technology platform, Ingenuity.


“The trading partnership opportunity is particularly exciting, providing Ingenuity with an unparalleled global growth opportunity.


“Furthermore, the combination of the acceleration of growth within Ingenuity and its separation into a distinct entity will enable THG to unlock significant incremental shareholder value over time.”

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