The Hut Group (THG) has struck a $1 billion fundraising deal, which has valued THG Ingenuity, its business-to-business tech arm, at $6.3 billion, the same valuation that the whole company floated last year.

WHO: The Hut Group was founded in 2004 by Chief Executive Matthew Moulding and CFO John Gallemore, retails more than 8,000 brands, and operates more than 160 localized websites across 35 languages and 42 currencies. THG has become one of Europe’s largest online retailers of premium beauty brands.

THG Ingenuity, the technology services division of The Hut Group (THG), provides brands its technology infrastructure to develop their D2C businesses, delivering digital transformation across all touchpoints of the consumer journey effectively.

WHY: The net proceeds of the placing and the subscription will be used in effect to replenish and refinance the resources the company has invested in a number of strategic acquisitions announced in the last six months, to finance the acquisition of Bentley Labs, and to capitalize on multiple acquisition opportunities currently available to the group.

IN THEIR OWN WORDS: Matthew Moulding, founder, Executive Chairman and CEO of THG, said: “We are delighted to announce this financial and trading partnership opportunity with SoftBank, one of the world’s leading technology investors, recognizing both the capability and inherent value of our proprietary technology platform, Ingenuity.

“The trading partnership opportunity is particularly exciting, providing Ingenuity with an unparalleled global growth opportunity. Furthermore, the combination of the acceleration of growth within Ingenuity and its separation into a distinct entity will enable THG to unlock significant incremental shareholder value over time.

“The capital raise will provide meaningful capital to accelerate our strategic growth ambitions across our whole business.”

A THG statement issued to the London Stock Exchange added, “THG has been successful in growing through disciplined M&A activity and this continues to be an important part of the group’s strategy. THG has an established record of acquiring, vertically integrating, and digitalizing brands from largely offline channels. Management’s purpose for the IPO was to step change the group’s access to funding to capitalise on the volume and scale of opportunities available.”

DETAILS:

• SB Management, a wholly owned subsidiary of Japanese tech investment giant SoftBank, has bought an option to buy 19.9% of THG Ingenuity in a deal that sees it invest $730 million in the group. And approximately $1 billion in total revenue is coming from institutional investors placing up to $270 million with Sofina, a longtime technology-focused shareholder expected to participate in placement for up to $85 million.
• The group said that it is anticipated THG Ingenuity will be separated into a THG-owned and -controlled subsidiary company. The separation of Ingenuity is expected to complete in 15 months. The company said they have no plans to sell Ingenuity or other divisions completely and the separation was designed to create “an entity through which Softbank can invest.”
• Barclays Bank, Citigroup Global Markets, Goldman Sachs International, and Jefferies International are acting as joint global coordinators and joint bookrunners in respect of the placing.