Japanese conglomerate SoftBank has led a $1bn investment round into Manchester-based ecommerce company The Hut Group, acquiring a 9.5% stake for $730m.
SB Management, a division of SoftBank, has the option to invest a further $1.6bn into The Hut Group’s yet-to-be-formed technology division, THG Ingenuity, for a 19.9% stake.
Such a move would value THG Ingenuity at £4.5bn – the same valuation for the entire Hut Group business when it listed on the London Stock Exchange last September. The Hut Group currently has a market capitalisation of £5.8bn.
The Hut Group described Ingenuity as a “controlled subsidiary group, comprising the Ingenuity platform IP and operating trade and assets.” It plans to spin it into a separate company within the next 15 months Reuters reported, at which point SoftBank could exercise its option to invest.
Also known as THG, The Hut Group offers beauty, wellness, luxury, sports nutrition, lifestyle and entertainment products via its online platforms. It also provides software as a service to other brands to market their products online, including Unilever.
The equity raising priced The Hut Group at 596 pence per share, up from the 500 pence price at IPO. News of the investment sent shares rising by around 14%.
Long-standing shareholder Sofina is buying an additional stake “in an amount of up to $85m.”
Hut Group CEO Matthew Moulding, who founded the company in 2004, said: “We are delighted to announce this financial and trading partnership opportunity with SoftBank, one of the world’s leading technology investors, recognising 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.”
On Monday The Hut Group also announced it is acquiring New Jersey-based skincare and haircare product company Bentley Laboratories for $255m. The Hut Group said the acquisition is expected to increase 2022 financial year revenues by $77m.
The Hut Group owns a number of brands including Lookfantastic, Myprotein, Glossybox and Illamasqua. To add to that, it last month acquired nutrition bar Brighter Foods in a £43m deal.
SoftBank is one of the most prolific investors in technology companies and has pumped more than $100bn into companies including Uber, WeWork and OneWeb.