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Wednesday 13 October 2021

Hut provides no shelter for Moulding

logoI wasn’t there but I wish I was! I refer to yesterday’s investor presentation led by Matthew Goulding, founder, executive chair and CEO of THG, the Manchester-based, UK-listed ecommerce brand-building global empire formerly known as The Hut Group.

According to media reports (e.g. FT, Times, etc), investors were so impressed with Goulding’s pitch that they marked down THG’s shares by as much as one-third after the show, leaving shares almost two-thirds down on the year.

You should read the articles yourselves, and I only mention them because some of the investor concern centred around THG Ingenuity, the end-to-end direct-to-consumer e-commerce platform business unit supporting THG’s various businesses. You may recall from my post last month that THG Ingenuity had just invested $2m into Stevenage-based data centre player Civo (see Softbank-supported THG Ingenuity orchestrates cash container for Stevenage’s Civo).

THG Ingenuity had itself raised over $1b in a funding round in May of which $730m came from Japan’s (in)famous Softbank Group, buying it 10% of the equity The deal came with an option for Softbank to invest a further $1.6b in THG Ingenuity which, if exercised, would give it a shade under 20% interest in the technology unit at a valuation of $6.3b/£4.5b. The deal raised all sorts of questions at the time, more so now after THG’s share crash which reportedly leaves Softbank’s call option valuing the THG Ingenuity business at more than the market cap of THG itself (£4.2b at close of play last night).

The rest of the investor day sounded like a real hoot, with Moulding seemingly unaware that the hole he was digging was unsurprisingly getting deeper, so weakening the foundations upon which his Hut was built.

Posted by: Anthony Miller at 08:33

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