THG Raises $1 Billion for M&A, Adds SoftBank as Key Investor

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U.K. e-commerce operator THG Plc is raising $1 billion for future deals, with Japan’s SoftBank Group Corp. -- one of the world’s biggest tech dealmakers -- becoming a cornerstone investor.

THG, which operates websites that sell beauty and nutrition products, including Myprotein.com and Coggles.com, is also buying the U.S. beauty company Bentley Laboratories for $255 million, according to a statement Monday.

THG was one of the largest European listings last year. The company raised 1.88 billion pounds ($2.4 billion) in September via an initial public offering in London, cashing in on consumers turning to digital retail during the coronavirus pandemic.

The deal with SoftBank will give the Japanese investor the right to buy a 19.9% stake in THG Ingenuity, the company’s online e-commerce platform, for $1.6 billion, with further commercial deals expected involving SoftBank’s portfolio companies.

“The U.S. is an important growth market,” said Matthew Moulding, THG’s chief executive officer and executive chairman. The new capital will “accelerate our strategic growth ambitions across our whole business.”

In December the company agreed to buy Dermstore LLC, a retailer of high-end skincare and specialty beauty brands, from Target Corp. for $350 million.

The Hut Group was co-founded in Manchester, England, in 2004 by now-billionaire Moulding and John Gallemore, originally to sell DVDs. But the company started snapping up other brands and websites. Though best known for selling beauty products online, THG also has a division called THG Ingenuity that licenses technology to other retailers.

Tech Capabilities

The capabilities of THG Ingenuity have helped fuel the Hut Group’s bumper valuation. The company has faced criticism about its corporate governance, however, as Moulding owns a golden share which could block a takeover.

SoftBank’s option to invest in THG Ingenuity gives the platform a valuation of 4.5 billion pounds. The business offers brands services, from managing corporate influencers to warehouse systems. It posted just under 100 million pounds in revenue last year.

The investment is SoftBank’s biggest U.K. investment after the collapse of Greensill Capital. Other U.K. investments include pharma startup Exscientia, banking startup OakNorth and gaming company Improbable Worlds.

The deal with SoftBank was led by Akshay Naheta, who has worked on some of that company’s biggest deals and leads its public equity investments.

©2021 Bloomberg L.P.

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