UK-based consumer goods technology provider Hut Group (THG) is preparing for a flotation at a reported £4.5bn ($5.85bn) equity valuation.
THG had raised £66m in December in its latest equity round including Belgium-based industrials and consumer holding company Sofina and asset manager BlackRock’s new innovation capital team. (Back in 2010 THG had called the then angel and venture capital backing its pre-initial public offering round.)
But the size of 2019’s equity round paled beside the gearing up of its balance sheeting with more than £850m of borrowings. But even with the covid-19 crisis affecting events and some consumer goods spending on beauty products, THG has increased its turnover.
In the year to December 2019, THG’s Ebitda were up 22% to £111m, on sales that rose 24%, topping £1bn for the first time, according to the FT.
The group had six-month sales of £675.6m and adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of £60.5m to June 30, the FT said. The “adjusted” and “before” parts will be crucial given the debt payments and offer public investors a near-40 multiple if the market capitalisation is about £4.5bn.
While high compared to traditional beauty companies, such as Coty, Estee Lauder and Revlon, THG is a Manchester-based tech company in outsourcing its services to third-parties to connect with consumers so claims a higher multiple.
The initial public offering also follows on from a good period for so-called unicorns – private companies valued at more than $1bn – outside of London in the UK. Flotation for Scotland-based financial advisory firm Nucleus in 2018 and growth equity for Birmingham’s Gymshark this year and were kickstarted by Skyscanner’s sale to Ctrip for £1.4bn in 2016. Add in the roll-call of highly-valued spinouts from Oxford, Cambridge and other universities is encouraging for the next generation.
To complement our GCV Symposium held at London’s County Hall on 7-8 December, we are planning our first event for the north of England and Scotland for next April in partnership with business advisory firm UMi and the Centre for Process Innovation (CPI) – ideas and interest most welcome.
