THG PLC on Thursday said that it is seeking to raise £75 million from investors to help ‘demerge’ one of its divisions.
The fund raise, by way of a placing, subscription and retail offer, will facilitate the demerger of its Ingenuity arm, which THG first announced in September.
Ingenuity, the firm’s technology platform will trade as a standalone independent private entity and have no recourse to THG post demerger, the Manchester-based e-commerce retailer said.
The remaining group will consist of what THG called its ‘highly cash generative’ Beauty and Nutrition divisions.
THG Chief Executive Matthew Moulding has indicated his intention to invest £10 million in the equity raise, with additional indications received from certain other long-term shareholders.
Moulding and such other shareholders are expected to account for around £33 million of the target equity raise.
These funds, in conjunction with appropriate standalone debt issuance plans for Ingenuity, are expected to provide Ingenuity with sufficient medium-term funding as the business approaches positive cash generation on a standalone basis.
THG’s board has approved a valuation of Ingenuity of £100 million.
In addition, THG issued a third quarter trading statement.
Revenue from continuing operations was £442.8 million in the three months ending September down 0.6% on-year at constant currency.
THG Beauty revenue rose 2.8% to £254.7 million, THG Ingenuity revenue increased by 16% to £44.0 million but THG Nutrition revenue fell 11% to £134.5 million.
THG expects full-year performance to be within the company consensus range.
Moulding said: ‘It was especially pleasing to see another solid quarter of delivery from both our Beauty and Ingenuity businesses, rewarding the significant overhaul of their respective operating models during 2022 and 2023. The short-term disruption from the major rebrand of Myprotein is now behind us, and we were pleased that in September Nutrition delivered its best sales performance since January.’
Shares in THG closed down 2.8% at 51.70 pence each in London on Thursday.
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