Shares in THG experienced a decline of approximately 6% following a £95m fundraising effort.
- Existing shareholders, including CEO Matthew Moulding, significantly contributed to the funds raised.
- The fundraising aimed to support the demerger of THG’s Ingenuity division.
- Despite being oversubscribed, shares were offered at a 5.2% discount to the previous day’s closing price.
- THG plans to focus on its Beauty and Nutrition divisions, aiming to enhance shareholder value.
Shares in THG experienced a decline of approximately 6% following a fundraising effort amounting to £95 million by the Manchester-based company. The ecommerce firm chose to price the shares at 49p, reflecting a 5.2% discount compared to the previous day’s closing price. Despite the fundraising being oversubscribed, the stock witnessed a slight drop as markets opened, with the price settling below the initial offering.
Significant contributions were made by existing long-term and institutional shareholders, with CEO Matthew Moulding investing £10 million. A subsequent retail investor offer raised an additional £5 million. This fundraising initiative is designed to support the company’s strategic demerger of its Ingenuity division, which specialises in providing digital services to leading consumer brands.
THG has articulated that the demerger offers a meaningful opportunity to generate value for shareholders. This strategic move allows the Ingenuity division to operate independently, focusing on scaling brands digitally and efficiently. In addition, this separation is expected to ease THG’s financial liabilities, thereby potentially improving their standing with major financial rating agencies.
The company plans to redirect its focus towards enhancing its Beauty and Nutrition divisions, which include prominent brands known for their market impact. By divesting the Ingenuity division, THG aims to mitigate its debts by transferring a portion of its lease liabilities, which is expected to positively influence the company’s financial metrics.
THG’s stock has experienced a downward trend, having fallen by more than one-third since the beginning of the year. This decline highlights broader challenges faced by the company, despite the efforts to strategically realign and reinforce its business model.
THG’s recent fundraising and strategic demerger reflect the company’s focused attempt to stabilise and grow within its market sectors.
