THG raises £95m to fund Ingenuity demerger

THG has raised over £95m to fund the demerger of its Ingenuity arm, which is set to become a standalone and independent company, after receiving “strong support” from new investors and existing shareholders.The oversubscribed and upsized fundraise of £95.4m comes as existing shareholders contributed around £50m, while CEO Matthew Moulding himself invested £10m. 

Yesterday (10 October) the group confirmed plans to target a £75m equity raise through a placing and subscription, as well as a retail offer.

At the time, Moulding indicated his plans to invest £10m, with additional indications received from shareholders including Sofina, Mark Evans, Sir Terry Leahy, West Coast Capital and Brian Kennedy.

Overall, £67.7m was raised through a placing with existing shareholders, while £22.2m was raised through a subscription agreement.

The company also received a £10m strategic investment from Frasers Group, “further underscoring their commitment to its multi-year strategic partnership with THG”. An additional £5.4m was raised through the retail offer. 

According to THG, Ingenuity’s demerger will simplify THG’s business model, leading to an improved balance sheet, capex and cashflow profile. Following the demerger, the group would consist of THG Beauty and THG Nutrition.

The spin-off follows a detailed review of THG’s businesses, consultation with major shareholders and the legal separation of its key trading divisions in 2022.

THG’s board said it believes that there is a “significant opportunity to create value for shareholders by demerging Ingenuity into a separate private company which can focus on scaling brands digitally, navigating the complexities of acquiring new audiences, driving traffic, facilitating frictionless ecommerce and distributing products to consumers”.

This week, the group also reported that sales in its third quarter dipped slightly by 0.6% to £433.1m. It welcomed a “solid” performance in THG Beauty, where sales rose by 2.8% to £254.7m, while active customers grew by 5%. 

THG Nutrition sales were down by 10.5% to £134.5m, however, though sales recovered from July and improved steadily through the quarter. In addition, THG Ingenuity sales rose by 16% to £44m in the period, driven by existing and new partnerships in its fulfilment and courier management services.  

Moulding said: “Today we have separately announced significant progress on our strategy to demerge THG Ingenuity into a private company supported by major shareholders. THG PLC will remain a listed leading consumer brands group, with our planned transfer to the ESCC well on track. 

“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.”