THG PLC (LSE:THG), parent company of the Hut Group, has been offered several suggestions on how to improve its market value by new activist investor Kelso Group Holdings PLC (LSE:KLSO) after it increased its stake and proposed a placing to raise £3mln.
The activist investor, which listed in London in January, said it snapped up an extra 2.4mln shares in the online retailer and MyProtein owner, taking its total beneficial interest, consisting of ordinary shares and CFDs, to 7.4mln shares.
Kelso, which is led by John Goold, former chief executive of small cap broker Zeus, said it had four pieces of advice for THG boss Matthew Moulding and chair Charles Allen, who was appointed last year.
Firstly, would be to hurry up with its proposed move from London Stock Exchange’s standard list to a premium listing, which it felt would be “significantly accretive to shareholder value” and has been on pause since last year.
THG was also urged to provide “appropriate detailed segmental analysis” within its results and accounts, specifically of the different division’s contributions and profits, alongside a divisional summary of any tax losses.
Having been given a guided tour of the company's operations in Manchester and Warrington, Kelso's said it was its view that “there is a clear path to enhancing shareholder value through more financial visibility, which we hope is detailed in the pending results”.
The company should also consider a share buyback programme “soon” after its preliminary results and also “reinvigorate” its relationship and communications with the investment community.
This latter suggestion might cause anxiety in the boardroom, given the plunge in share price following a calamitous analyst and institutional investor presentation in October 2021.
So far this year, THG’s share price has increased by 40%, and was up another 3% on Thursday morning to 65.89p, with Kelso’s original purchase made at an average price of 54.5p.
As for itself, Kelso's proposed placing is at a price of 2.5p, a 25% premium to its fundraising in January, to raise another £3mln.