Big battalion investors back Hut Group flotation: Share sale to value online leisure firm at £4.5bn
- The online retailer’s listing could easily be the UK’s biggest initial public offering this year
- Major institutions have pledged to buy a total of £565m worth of shares
A roster of big-name investors has backed The Hut Group as it plans to list on the stock market for £4.5billion.
The Manchester-based online retailer, which owns websites such as Look Fantastic and nutrition brand Myprotein, confirmed that it will go ahead with its blockbuster listing in what could easily be the UK’s biggest initial public offering (IPO) this year.
Major institutions including Blackrock, Janus Henderson, Merian and the Qatar Investment Authority have pledged to buy a total of £565m worth of shares when the group goes public later this month.
Bonus: The listing on the stock market could be a life-changing moment for The Hut Group’s founder Matthew Moulding
The firm is planning to sell £920m of shares in the offering, while existing investors – who include management, employees and investment firms – are also expected to sell down some of their stakes.
The listing on the stock market could be a life-changing moment for The Hut Group’s founder, Matthew Moulding, who is set to bag a £700m bonus if the company’s value rises to £7.25billion over the next two years.
The 48-year-old, who was inspired to set up the business in 2008 after buying a CD online, also owns a 20 per cent stake worth around £900m. Moulding built his career at Caudwell Group, the mobile phone conglomerate founded by Phones4U entrepreneur John Caudwell, but disagreed with his former boss over his reluctance to move online.
Now Moulding’s plans to stay heavily involved in The Hut Group have raised eyebrows among corporate governance experts. As well as taking on the role of executive chairman, which is often frowned upon as it combines the positions of chief executive and chairman and reduces scrutiny in the boardroom, Moulding will hold onto a ‘founder’s share’ that gives him the power to veto takeovers.
And all the firm’s properties will be transferred to another company, owned by Moulding personally, and leased back for £19.4m per year in rent.
Cliff Weight, director of small investors’ campaign group ShareSoc, has slammed the firm for ‘awful corporate governance’. But if the shares do shoot up, employees who have together been handed a fifth of the company will also reap a windfall from the rise in value. It isn’t just company insiders who are set to rake in the money following the listing.
City commentators have called it ‘another banker buffet’, as a roll-call of investment banks are working on the deal including Citigroup, JP Morgan, Barclays, Goldman Sachs, HSBC, Jefferies, Numis and Rothschild. They are expected to earn a combined total of £50m for their work.
And US private equity titan KKR, which bought into the group six years ago, will be flush with cash as it is expected to sell down its stake during the float.
When KKR bought a 20 per cent stake in The Hut in 2014, the entire business was worth just £500m.
The Hut, which also owns luxury retreat Hale Country Club & Spa in Cheshire, has pulled in more and more customers as shoppers have turned online. It boasts annual revenues of £1.1billion – and as well as selling its own brands, it also licenses its ecommerce technology to other retailers such as Boots and Nestle.
It is this line of business which is expected to really set The Hut apart, as more retailers look for a tried-and-tested platform to boost their online revenues.
The Hut now employs around 7,000 staff, operates in 169 countries, and is building the largestever bespoke office project outside London.
Its new campus, part of the Manchester Airport City complex, is due to cost more than £800m and will provide space for around 12,000 staff.
Bricks-and-mortar: The Hale Country Club & Spa has hosted the likes of Chelsea coach Frank Lampard and his wife, TV presenter Christine (pictured)