LONDON: E-commerce firm The Hut Group is preparing for its first day of trading on Wednesday after batting away corporate governance concerns to seal the first major British initial public offering since the start of the COVID-19 crisis.
The company, which helps sell retail brands including Lookfantastic and skincare group ESPA, sold 376 million shares at 500 pence each to raise 1.88 billion pounds in a float that valued the company at 5.4 billion pounds ($6.96 billion).
The biggest London stock market debut since 2013 nets the company 920 million pounds while shareholders led by founder Matthew Moulding will share gross proceeds of 961 million pounds.
While market participants welcomed the boost to a terrible year for new listings with European IPO volumes at their lowest level in eight years, some investors have raised concerns over the structure of the deal.
For example, Moulding will remain both chairman and chief executive of the company, while the shares are to be issued in different “classes”, allowing him voting powers vastly superior to most other London-listed companies.
The structural features of the deal mean that The Hut Group will not be granted a so-called premium listing and will not be eligible for the FTSE 100 despite being comfortably big enough for the blue-chip index.
“There wasn’t too much concern about this during the bookbuild – investors understand that the founder is a key part of the story,” said a source familiar with the transaction.
The source added that the strong IPO environment meant other companies could take heart from THG’s success and launch deals.
“We expect it to be a busy fourth quarter,” he added.JP Morgan, Citi, Barclays and Goldman Sachs were global coordinators. HSBC, Jefferies and Numis acted as joint bookrunners.
($1 = 0.7754 pounds)
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