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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Jupiter Fund Management plc    JUP   GB00B53P2009

JUPITER FUND MANAGEMENT PLC

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The Hut Group shares soar 30% after bumper $7 billion London IPO

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09/16/2020 | 08:05am EDT
The Hut Group Founder and CEO Moulding poses in Manchester

The Hut Group's shares soared 30% in the company's first day of trading on Wednesday after batting away corporate governance concerns to seal its 5.4 billion pound listing, one of London's largest tech IPOs to date.

The company, which helps sell retail brands, including Lookfantastic and skincare group ESPA, sold 376 million shares at 500 pence each to raise 1.88 billion pounds.

The biggest London stock market debut by market cap since Royal Mail in 2013 nets the company 920 million pounds while shareholders, led by founder Matthew Moulding and private equity group KKR, will share gross proceeds of 961 million pounds. KKR sold its entire shareholding.

The shares were trading at 646 pence at 1040 GMT.

Analysts suggested the stock surge might prompt some questions as to whether the deal was pegged at the right price.

"Time will tell as to whether the valuation is a solid one, or whether KKR has made the right move in selling out of their entire stake," CMC markets analyst Michael Hewson said.

GOVERNANCE CONCERNS

While The Hut Group's debut gave a boost to a terrible 2020 for new listings, with the COVID-19 pandemic driving European IPO volumes to their lowest since 2012, the unusual structure of the deal has raised some concerns among corporate governance watchers.

For example, Moulding will remain both chairman and chief executive of the company, while the company shares are to be issued in different "classes", allowing him voting powers vastly superior to most London-listed companies.

"They are completely separate roles and (combining the two) undermines the board's primary duty, which is to challenge the CEO," Francisco Lopez de Saa, stewardship director at Minerva Analytics, said.

He said the offering of different share classes was unsuitable for the UK market and reduced the protection of minority shareholders.

This structure means that The Hut Group will not achieve a so-called premium listing and will not be eligible for the FTSE 100 despite being big enough for the blue-chip index. The London Stock Exchange declined to comment.

One source close to the deal said the LSE standard listing required high levels of governance and was equivalent to other European exchanges.

BlackRock, Henderson Global Investors, funds managed by Merian and the Qatar Investment Authority agreed to buy 565 million pounds of the shares offered.

"There wasn't too much concern about this during the bookbuild - investors understand that the founder is a key part of the story," said a second source familiar with the transaction.

He said companies would take heart from THG's success and launch deals this year. "We expect a busy fourth quarter."Citi, JP Morgan, Barclays and Goldman Sachs were global coordinators. HSBC, Jefferies and Numis acted as joint bookrunners. Rothschild advised the company.

By Abhinav Ramnarayan and Sinead Cruise


Stocks mentioned in the article
ChangeLast1st jan.
BARCLAYS PLC 0.83% 104.66 Delayed Quote.-41.74%
HSBC HOLDINGS PLC 1.57% 324 Delayed Quote.-45.26%
JUPITER FUND MANAGEMENT PLC 1.86% 230 Delayed Quote.-43.80%
LONDON STOCK EXCHANGE PLC 0.79% 8394 Delayed Quote.8.31%
NUMIS CORPORATION PLC -0.34% 296 Delayed Quote.-1.00%
ROYAL MAIL PLC -1.91% 231.1 Delayed Quote.2.12%
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Financials
Sales 2020 378 M 488 M 488 M
Net income 2020 81,9 M 106 M 106 M
Net cash 2020 157 M 202 M 202 M
P/E ratio 2020 15,0x
Yield 2020 7,30%
Capitalization 1 254 M 1 618 M 1 621 M
EV / Sales 2020 2,91x
EV / Sales 2021 2,54x
Nbr of Employees 522
Free-Float 90,7%
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Mean consensus HOLD
Number of Analysts 16
Average target price 258,75 GBX
Last Close Price 230,20 GBX
Spread / Highest target 51,2%
Spread / Average Target 12,4%
Spread / Lowest Target -13,1%
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Managers
NameTitle
Andrew James Formica Chief Executive Officer & Director
Nichola Pease Non-Executive Chairman
Wayne Mepham Chief Financial Officer & Director
Edward Henry Bonham Carter Vice Chairman
Jonathon Roderick Alan Bond Senior Independent Director
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