The Hut Group picks syndicate to aid potential £4.5bn float

The Hut Grou‎p, the online consumer goods retailer which has become one of Britain’s biggest home-grown technology companies, has picked seven banks to work on a potential £4.5bn flotation.

Sky News has learnt that the Manchester-based company has hired Citi, JP Morgan, Barclays, Goldman Sachs, HSBC, Jefferies and Numis to oversee what would be London’s biggest initial public offering of 2020 to date.

City sources said on Tuesday that the quintet of banks had been hired in recent days, with a view to a £1bn sale of new and existing shares in The Hut Group possibly taking place as soon as September.

The company has been holding talks for several weeks with a string of blue-chip investors including a Singaporean sovereign wealth fund, Baillie Gifford, Capital Research Group, Dragoneer Investment Group and TSG Consumer Partners about a deal that would value it at well over £4bn.

Citi and JP Morgan have been working with The Hut Group, which owns brands such as Christophe Robin, ESPA and Eyeko, throughout the process, with the other five banks appointed this week.

The company’s board has yet to formally decide whether the fundraising, which would amount to hundreds of millions of pounds, would be conducted in the public or private markets.

The institutions with which the company has been speaking are said to be open to buying shares either privately or through an IPO.

However, the hiring of such a large syndicate of investment banks underlines the fact that The Hut Group is now far closer to going public than at any previous point in its 16-year history.

Sources said presentations to analysts had been scheduled for this week – a further sign that it is actively contemplating a public listing.

A large share sale by The Hut Group would enable some of its early investors, such as the private equity firm KKR and venture capital backer Balderton Capital, to offload their stakes at a massive premium.

In total, roughly 15pc of the company’s shares are expected to be placed with new investors in the next few months.

The company already counts the world’s biggest asset manager, Blackrock, among its shareholders.

On previous occasions it has opted to raise money without listing its shares on a public exchange, using such fundraisings to refresh its private investor base.

A THG spokesperson said: “Each year THG speaks to major global investors about future investment options to support global growth plans.

“This has always been done as a private company, and this year is no different.”

The prospective deal has been driven by a spectacular uplift in sales and profits during the first half of its current financial year.

Founded in 2004 by Matthew Moulding and John Gallemore, The Hut Group has demonstrated stellar growth, surpassing £1bn in sales last year.

As well as its wholly owned brands, the company sells third-party branded products such as those made by Glossybox and LookFantastic.

In recent years, it has diversified its technology offering to become a provider of digital services through its own platform, THG Ingenuity, to some of the world’s biggest consumer brands, including Johnson & Johnson, Nestle and Procter & Gamble.

Sources said this weekend that Singapore’s Government Investment Corporation (GIC) was among the funds that had been presented to as part of an investor roadshow in recent weeks.

The company’s last major primary share sale took place more than two years ago, when Old Mutual Global Investors – now part of Jupiter Fund Management – became a shareholder.

It did also receive a new equity injection late last year as part of a broader refinancing that also saw it secure new credit facilities as well as funds provided to a subsidiary that owns its real estate assets.

The Hut Group employs more than 7000 people, making it one of the biggest homegrown employers in northwest England and one of Britain’s fastest-growing technology-led companies.

Other existing shareholders in the company include ‎Sofina, a Belgian investor.