THG founder's comments prompt go-private speculation, shares rise
There’s speculation that THG’s founder and CEO Matt Moulding could attempt to take the listed company private after he commented that he regrets listing the firm around a year ago. The company's shares rose over 5% in early trading on Monday as a result.
The company has seen its share price plunging in recent periods as investors questioned the firm’s future prospects and strategy, and also its corporate governance.
Moulding said in an interview with GQ, at the magazine’s GQ Heroes event, that he wished he’d floated the firm in New York rather than London and that its listing “just sucked from start to finish”. He also said he wouldn’t float the firm if he had the chance to do it again.
Moulding is currently the biggest shareholder in THG, its chief executive and executive chairman (although the firm is searching for an independent chairman), as well being its major landlord.
The business’s valuation has fallen by more than half since it floated in September 2020, even though the founder said it’s “in better shape than it’s ever been”.
Moulding hinted that a buy-back of the business could be a way forward.
“We do have other options in terms of I’m a big shareholder, more than half of the business is owned by me and a few people that I’m close with,” he said. “So, you know, the share price only moves because of the balance of shares that might trade around. So I’ll [keep an] open mind”.
Despite some investors selling out, early backers including Sir Tom Hunter’s West Coast Capital, CVC’s Dominic Murphy and ex-Tesco boss/new Morrisons chairman Sir Terry Leahy, remain supportive.
That said, Moulding is clearly bruised by the reaction of institutional investors in recent months and also said he’s found the process stressful. And there’s a part of him “that wants to take the Mike Ashley approach”. Frasers Group boss Ashley has famously gone his own way at the helm of the listed company that he founded and still controls and has been scathing about his critics.
Moulding meanwhile was also scathing about short-sellers — investors who ‘bet’ that a firm’s shares will continue to fall and strike deals that mean they profit when they do drop.
He talked about a “pretty aggressive short attack”, although THG shares are near the end of the list of the 100 most shorted shares on the London Stock Exchange. In fact, investors are making more bets against a variety of London-listed shares including, Boohoo, M&S, ASOS, Superdry, N Brown, Coats Group and some of the UK’s biggest retail property firms.
But Moulding said “it’s the undisclosed shorts. So what you do is you don't let anyone know who you are. So you operate from the Bahamas or from Switzerland”.
Having said the wasn’t interest in floating the company some time ago, in answer to the question of why he did float the firm, Moulding also said in the interview that he “thought the pandemic, when it came, was going to be a big, big impact on business”. He was worried about the amount of debt the firm had and wanted to ensure the business was well capitalised. A listing was a good way of raising mega-money relatively quickly.
And he hit back at critics of THG’s corporate governance with him in complete control of the company, saying: “Let's be clear, right? LVMH, just the same – from top to bottom, a fantastic business. And that's actually when you go across most [of] the beauty industry, across the tech industry, this is incredibly commonplace where we are. Even if you look at the City, all of your pension money, all of the fund managers in the world, the big major money managers, they've got the same set-up. So the difference is: the UK stock market, it's not common.”
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