The Hut Group, the UK’s largest privately owned ecommerce group, yesterday officially announced its intention to float on the London Stock Exchange through a £4.5 billion IPO. The plan is to raise at least £920 million from the IPO, through the sale of at least 20% of the company’s stock.
Matthew Moulding, the Hut Group founder is also in line for a serious payday as reward for building the company into a hugely successful ecommerce operation employing over 7000 people since launching its first website in 2004. He’s struck a deal to become the company’s landlord after the IPO, and will earn £19.4 billion a year in rent.
He will also receive shares that will be worth up to £700 million should the group’s valuation top £7.25 billion within the next two years, through a share-based incentive scheme. That bumper stock payout is, says Mr Moulding, supported by other investors in the company in recognition of the fact he has sold down his own stake from 60% to 20% over the past ten years. His personal dilution was made to raise private investment to fuel the company’s growth.
Around 500 of the company’s staff will also share a £250 million incentive that will be activated if its valuation grows by at least 40%.
Mr Moulding has resisted taking the company public until now as he did not want to lose control of the company he founded and successfully grew to 200 ecommerce websites from a first business selling DVDs online. However, he has agreed a deal with the London Stock Exchange that will give him a ‘founder share’ allowing him a veto on any takeovers. He’ll also hold the dual role of executive chairman of the board and chief executive.
The unusual arrangement, while satisfying Mr Moulding’s desire to keep a firm grip on the reigns of the Hut Group for the foreseeable future, does mean that the company will not be permitted to become a constituent of any of the FTSE indices.
Mr Moulding commented:
“Our intention to float The Hut Group on the London Stock Exchange reflects the achievements of the past but also our strong belief in the significant potential for THG in the future.”
“THG has enjoyed strong growth since being founded in 2004, employing more than 7,000 people and establishing a track record of consistent delivery for our customers.”
The Hut Group’s sprawling ecommerce empire includes websites selling its own proprietary brands including Myprotein fitness supplements, a number of other nutritional and beauty brands and third-party products. Like many ecommerce businesses it has benefitted from the chaos of 2020, especially the Covid-19 enforced lockdown, and has seen revenues rise by 35.8%.
The Hut Group IPO will be the first big listing on the LSE since the onset of the coronavirus pandemic early in the year and almost certainly the biggest of 2020.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.