The Hut Group Seeks as Much as $2.4 Billion in London IPO

British e-commerce operator The Hut Group Ltd. said its initial public offering could raise as much as 1.87 billion pounds ($2.4 billion), which would make it Europe’s second-largest listing of the year.

Besides the 920 million pounds of new stock that the company already announced it will sell, investors are offering another 950 million pounds of existing shares, The Hut Group said in a statement Thursday. In all, about 374 million shares, or 35% of the company, are being marketed in the IPO at 5 pounds each.

Shares flew off the shelves, attracting orders to cover the IPO within 40 minutes, according to terms seen by Bloomberg, showing strong demand even in volatile equity markets. Chief Executive Officer Matthew Moulding will have a 25.1% stake in the company after the IPO, which values the company at 5.4 billion pounds, making him a billionaire.

The deal is structured as a fixed-price listing, which is unusual in the U.K. Typically, IPOs are marketed with an initial price range for as long as two weeks, with bookrunners pricing the shares based on investor orders.

A total of 615 million pounds worth of IPO shares has already been reserved for a group of cornerstone investors, with Dragoneer Investment Group’s 50 million-pound commitment joining those made by BlackRock Inc., Henderson Global Investors Ltd., Merian Global Investors and Qatar Investment Authority.

If all the shares on offer are sold, the listing would be the second largest in Europe this year after coffee giant JDE Peet’s BV’s 2.3 billion-euro ($2.7 billion) Amsterdam IPO in May. The Hut Group’s offering doesn’t include an option for the underwriters to sell more shares if demand is high. The stock are expected to start trading on Sept. 16.

The offering includes another rare feature. Moulding, the company’s co-founder, will have a so-called golden or founder share that will give him power to veto any hostile takeover attempt for three years. That means The Hut Group doesn’t meet the corporate governance standards for a premium listing on the London Stock Exchange, and thus is ineligible for inclusion in benchmark indexes such as the FTSE 100, according to the LSE.

Moulding told Bloomberg that the company needed the extra protection because it received takeover interest but wants to expand into a “major, global player” rather than put itself on the block.

‘Unique Play’

The Manchester, England-based company operates websites including myprotein.com and Coggles.com that sell beauty and nutrition products and is seen as one of the country’s biggest digital success stories. Starting out as a white-label provider of e-commerce services in 2004, it now works with global brand owners such as Nestle SA and Procter & Gamble Co.

The Hut Group’s listing comes amid a boom in online shopping fueled by Covid-19 restrictions. The economic downturn amid the pandemic’s lockdowns and volatile markets had brought listing activity to a near stand-still, but the market is rebounding and now selectively open to those that have proven immune to the crisis.

Hut’s individual brands all have their own competitors, but when “housed and integrated on a single proprietary technology platform, the model creates a unique offering,” Davy analysts Cathal Kenny and Roland French wrote in a note. In the long run, growth at Ingenuity, the company’s technology platform, will be key, they said,

After the IPO, the company could achieve a valuation range of 7 billion to 7.5 billion pounds, Liberum analysts Wayne Brown and Adam Tomlinson wrote, calling the Hut Group a “unique play” as a brand builder and a technology provider giving investors exposure to high structural growth.

Besides Moulding, the company’s shareholders include other members of management, Old Mutual Global Investors, funds managed by BlackRock Inc., Sofina, Merian Chrysalis Investment Co., Balderton and KKR & Co.

JPMorgan Cazenove, Citigroup Inc., Barclays Plc, Goldman Sachs Group Inc., HSBC Holdings Plc, Jefferies Group LLC and Numis Corp. are arranging the deal.

©2020 Bloomberg L.P.

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