E-commerce giant THG has announced its decision to proceed with the demerger of its Ingenuity division, alongside plans for a £75m fundraising initiative led by CEO Matthew Moulding.
The Manchester group explained that the separation of Ingenuity, which includes business publication City AM, will facilitate the "simplification of THG’s business model, as a cash generative global consumer beauty and nutrition group, with an improved balance sheet, capex and cashflow profile".
The final terms of the demerger will be disclosed in due course, but it is anticipated that the firm will be demerged into an independent private company at an equity value of around £100m. "The Board 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," stated THG.
Following the completion of the deal, THG will continue to operate THG Nutrition and THG Beauty, which, according to a trading statement released last night, have increased third quarter revenues by 2.8 per cent to £254.7m, .
The news was accompanied by plans to initiate a £75m equity raise today to enable the spin-off. Matthew Moulding, founder and CEO of THG, has expressed his intention to invest £10m in the equity raise, with long-standing THG shareholders such as Sir Terry Leahy, Sofina and Mark Evans also expected to support the funding round.
According to THG, Moulding and other shareholders in the company are anticipated to contribute approximately £33m towards the target equity raise.
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