The Hut Group shares rise after founder Matt Moulding ditches his ‘special share’ veto
Shares in The Hut Group (THG) bounced back strongly after its founder agreed to give up his ‘special share’ in a bid to restore investors’ crumbling confidence in the company.
Matt Moulding said he would relinquish the structure, which had allowed him to veto any unwanted takeovers.
The move was welcomed by corporate governance experts, who had criticised Moulding’s iron grip on the company.
Governance issues: Hut Group founder Matt Moulding said he would relinquish the structure which had allowed him to veto any unwanted takeovers
THG, which sells clothes, make-up and protein shakes online, will now be able to list on the ‘premium’ sector of the London Stock Exchange, meaning it will be eligible for inclusion in the FTSE 100 index of Britain’s leading companies.
The company said the decision had been taken ‘in furtherance of good corporate governance’. Moulding, 49, said: ‘After the anniversary of our 2020 listing we feel that the time is right to make this next step and apply to the premium segment in 2022.’
Shares jumped 20.5 per cent to 348.8p, but are still 30 per cent off their initial public offering (IPO) price last year – implying that investors want THG to do more to clean up its act. Since its peak of 837.7p in January, the stock has tumbled almost 60 per cent.
THG said it would ‘undertake a further review of its corporate governance’, which could mean scouting out a new chairman.
Corporate governance experts were left scowling when THG listed last year with Moulding as its chairman, chief executive and landlord – in contravention of guidelines which state the roles should be kept separate.
The firm’s disastrous investor day last week proved the value of those rules, as shares tanked when Moulding unsuccessfully tried to explain his vision for THG.
Danni Hewson, a financial analyst at AJ Bell, said: ‘If he [Moulding] had had an experienced chairman on board, who had been able to prepare him for investors’ questions and navigate them, we wouldn’t be in this situation.’
Neil Wilson, analyst at Markets.com, said the golden share was due to expire after three years, and ‘bringing forward the move by a year is not exactly sweeping reform – nor is it a magic wand’.
But THG’s decision to drop the golden share – a structure which Moulding had so keenly promoted during the IPO last year – will be a blow to Chancellor Rishi Sunak’s stock market reforms.
In a bid to attract more fast-growing firms to the market, and replicate the success of the US with the likes of Amazon and Facebook, Sunak has overseen an overhaul which will allow businesses with a golden share to be included in the premium segment.
Hewson said THG’s saga will now have ‘got people talking’ about the reforms. She said: ‘They do need to happen if we are going to be able to compete with US markets.’