Kelso Group Holdings PLC on Tuesday announced its voting intentions ahead of the annual general meeting at THG PLC, which is scheduled for June 24.
Kelso said it plans to vote against the resolution to re-elect Independent Non-Executive Chair Charles Allen, whom it holds ‘ultimately responsible’ for the ‘lack of action and clarity’ regarding THG’s plans to move to the Premium List of the London Stock Exchange.
Kelso holds approximately 5.5 million shares in the Manchester-based e-commerce retailer, giving it a 0.4% stake.
THG said in October 2021 that it intended to apply for a premium listing in 2022, which would allow it to obtain indexation mostly likely on the FTSE 250.
The activist investor said it ‘remains firmly convinced that the sum of the parts valuation of THG continues to significantly exceed the current market capitalisation’, with THG shares trading at a ‘significant discount’.
THG shares were up 2.5% at 75.50 pence each in London late on Tuesday morning, with a market cap of £1.01 billion. Kelso shares were untraded on Tuesday, having last traded 2.6% lower at 2.85p on Monday morning.
Kelso on Tuesday reiterated its ‘strong belief’ that this discount ‘would narrow significantly if THG moved from the Standard List to the Premium List and clarified the Group’s future structure’.
Kelso acknowledged that in June 2022 the UK Financial Conduct Authority announced a still-ongoing review of the listing rules, considering merging the Standard and Premium Lists, and that THG is awaiting the FCA’s decision.
However, the investor countered: ‘Kelso believes the Board should take control of the timing of this value accretive decision. The board...believes any cost of transition would be dwarfed by the value benefits to shareholders and would further improve corporate governance at THG.’
Kelso added that it ‘finds it particularly remiss that there is minimal comment on strategic progress relating to this matter in the group’s recent annual report...this lack of clarity is a major factor contributing to the poor share price performance and the absence of new declarable shareholders to THG’s register in the last eighteen months.’
It added: ‘Whilst major strategic and structural issues remain unaddressed, the poor share price cannot be blamed on the London Stock Exchange.’
As a result, Kelso said it intends to vote against Allen’s re-election as THG’s chair ‘should be held accountable for leading THG’s strategy and communicating this in a clear and transparent manner to all shareholders’.
‘In the spirit of shareholder democracy, we are making this statement to encourage shareholder debate,’ the investor added.
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