Thursday 16 September 2021 9:39 am

THG targets separate IPO for beauty business

UK e-commerce company THG said this morning it will spin off its beauty division in a separate listing in 2022, and is also considering stock market listings for its other main ecommerce business, as well as its technology and logistics divisions.

A stock market listing comes after THG Beauty – which counts brands such as Lookfantastic, Glossybox and Espa in its portfolio – was one of the fastest growing parts of the business in the first half of the year, with sales of £461m in the six months to the end of June, up from £296m in the same period last year.

“A separate listing for THG Beauty will position the business very well to focus investment in its key growth areas, including own-brand portfolio expansion,” the company said this morning. “The decision of whether to separately list THG Nutrition and the timing will remain under consideration.”

The decision to spin out its beauty business comes just a year after Manchester-based THG (previously The Hut Group) listed on the London Stock Exchange, raising £1.88bn in the largest UK IPO since 2015.

Shares in THG surged as much as 15 per cent in May this year when the group, founded by Matthew Moulding, raised another $1bn further equity led by Japanese investment giant SoftBank.

As part of this deal THG agreed to sell a 20 per cent stake worth around £1.6bn in Ingenuity, its tech and logisitcs platform, to SoftBank, which now owns around 8 per cent of the group.

Ingenuity’s ‘commerce’ revenues surged 166 per cent year-on-year to £18.3m in the first half of 2021, and now the group is mulling a potential listing for this part of the business, it hinted this morning.

Overall group revenues were £958m, beating average analysts’ forecasts of £942m.

CEO Matthew Moulding said a decision on whether to list THG Nutrition, which reported revenue growth of 27 per cent to £328m in the first half, up from £258m last year, “will remain under consideration.”

Outlining how it had begun the process of separating its beauty business, THG said it would at first operate as a majority-owned subsidiary and that the group “retains ultimate discretion and flexibility to determine any subsequent IPO, or other structural option for Ingenuity, with the objective to maximise value for all shareholders”.