THG PLC (LSE:THG) is attracting buyout interest from several private equity firms after its shares tumbled in recent months.
After a string of governance missteps, critical assessments by some analysts and a calamitous investor presentation, three private equity groups were reported to be looking at taking the online retailer private.
The shares, which surged 17% on Friday after a report on the Betaville website that private equity firms Advent International, Leonard Green Partners and Apollo were "rumoured to be circling", then fell 6% on Monday.
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At 127.3p at lunchtime, they were down 84% from their high reach in their first days as a public company and almost 75% lower than their 500p float price from September 2020.
The Sunday Times also reported Boston, Massachusetts-based Advent, which has an office in London, has sent some of its people up to THG’s offices in Manchester.
It is understood that private equity firms have approached THG rather than the other way round.
Reports noted that If a deal were to go ahead it is possible that private equity buyers could opt to re-list the firm in the US, where investors are more accepting of fast-growing firm’s returning minimal profits.
Sources close to THG told the paper that Apollo was a less likely buyer and is already one of THG’s debtholders.
Broker Liberum said: "News about PE interest is a clear sign that shares have become too cheap for the proposition THG is offering, which is not just a typical online retailer but also a [software as a service] model with a very well-invested infrastructure.
"We think there would be clear value for PE firms to be had even if they paid a very significant premium to the current price to take it private, as a future listing in the US, at the right time, would likely attract much higher multiples."