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BlackRock-backed THG to launch £920m IPO

Katharine Hidalgo
04 September 2020

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BlackRock-backed online retailer The Hut Group (THG) has confirmed its intention to proceed with an initial public offering to raise gross proceeds of around £920m.

Existing investors have subscribed for a total of £565m's worth of shares at the offer price of £4.5bn pre-money equity valuation. BlackRock has committed £300m, Janus Henderson has committed £100m, Merian Global Investors has committed £90m and the Qatar Investment Authority has committed £75m. Certain investors will sell shares as part of the transaction.

The company will list on the London Stock Exchange and is targeting a net cash position of around 2.6x EBITDA for the last 12 months to June 2020. Following the listing, the company will have a free float of at least 20%.

In April 2010, Balderton Capital participated in a £14m pre-IPO placing of THG, though the company later decided against floating. In November 2010, the company raised £18.5m from existing investors to finance the £19.4m acquisition of Lookfantastic Group; backers included Balderton, Artemis, William Currie Group and ex-Matalan CEO Angus Monro.

In 2014, KKR acquired a 20% stake in the company for £100m and, in 2016, Sofina structured a round of growth funding, with participation from BlackRock. The deal was valued at £138m.

Old Mutual Global Investors led a £125m funding round in 2017, with participation from Sofina. The investment valued the company at £2.5bn. BlackRock and Sofina also invested £66m in the company in December 2019.

Alongside that latest equity financing, THG took out a five-year £150m revolving credit facility provided by Barclays, HSBC, Santander, Citi, NatWest and JP Morgan. It also secured £200m in secured debt and development facilities provided by Citi and CBRE Investment Advisory for a THG subsidiary comprising THG's property assets.

Citigroup Global Markets, JP Morgan Securities, Barclays Bank and Goldman Sachs will act as the joint global coordinators, while HSBC Bank, Jefferies International and Numis Securities will serve as the joint bookrunners for the offer. NM Rothschild & Sons will be the sole financial adviser to the company.

Headquartered in Cheshire, THG is an online retailer specialising in health and beauty. Established in 2004, it focuses on selling own-brand or third-party branded goods to customers directly through a portfolio of 60 international websites. The company reports revenue of more than £1bn for 2019.