If he really wanted to, Matt Moulding the boss and co-founder of the Hut Group, now called THG PLC (LSE:THG), could probably take his company private again.
Having floated the online retailer as Britain’s next tech superstar, with a valuation of £5.4bn, two years ago this month, today the market cap fell to a little over £500mln.
As his initial public offer incentive scheme reportedly enabled him to trouser £700mln if the shares achieved a 50% increase within three years (a feat it pretty much achieved in less than three days), Moulding probably wouldn’t need any private equity backers to snap up the firm.
The only problem would be all the seriously miffed and/or embarrassed investors that bought into the story that London was getting a potential tech titan.
Floated at a price of £5 apiece, the shares quickly ascended to hyped-up heights of £8, but the plunge has been almost as dramatic, with today's news of wider losses and slowing growth knocking the shares below 38p at one point this morning, down 95% from the peak.
The IPO was part of an apparent thundering herd of almost 30 UK and European unicorns that galloped onto the London market in the past three years, following the likes of Trainline PLC (LSE:TRN), Airtel Africa PLC (LSE:AAF), Network International Holdings PLC (LSE:NETW) and Finablr (remember them?), and bringing after it Deliveroo PLC (LSE:ROO), Trustpilot Group PLC (LSE:TRST), Alphawave IP Group PLC (LSE:AWE), Wise PL, Moonpig Group PLC (LSE:MOON) and many others.
Moulding and his backers are not the only ones nursing big losses, though only outdone by fraud-hit Finablr, which was taken private on the verge of collapse.
Of the companies that completed an IPO in London since 2019 with valuations close to the US$1bn mark of a unicorn (let’s say £0.8bn) two thirds have fallen since, with the average performance for the entire herd being a 20% decline.
Well played to those companies, advisers and their investors that have outperformed (topped by tightly held Kazakstan fintech Kaspi.Kz, Microsoft reseller Bytes Technology Group PLC (LSE:BYIT, JSE:BYI) and Darktrace PLC (LSE:DARK)).
Even those with falls of less than 20% might be applauded, given the wider sell-off of most of the market – though the FTSE 350 is up 6% since the start of 2019 and down 6% since 2020 began.
Although he joined with a ‘golden share’ to retain control in the event of a hostile investor or bid, Moulding has since agreed to give this up (though I am told he has yet to do so) and has put up a few internal walls in the company to make it easier to sell it off in parts, as has been mooted for its Ingenuity business and Beauty arm.
The valuations for any of these parts do not seem likely to be anywhere near the levels which the Manchester-based entrepreneur would have originally hoped (as he told GQ “the obvious lesson is don't IPO in the UK”).
With major backer Softbank having pulled out of its planned US$1.6bn investment deal this year and apparent bids from celeb investor Nick Candy deemed “unacceptable” by Moulding, the continued subsidence in the shares surely calls for the CEO to put his money where his mouth is and buying up more shares (or indeed the business) himself.
But while THG typically today talked up its “substantial progress”, with first-half revenue of £1.1bn, this ignored the wider operating losses as costs rose and investment was required into keeping prices down in the competitive and commoditised markets in which it operates.
Investors who avoided the company may be looking forward to learning Moulding’s next obvious lesson.
Company · Date · Opening market cap (£m) · Funds raised (£m) · Share price since listing
Finablr (taken over) · May 2019 · 1,206.80 · 306 · -94%
THG · Sep 2020 · 5,823.88 · 1,881 · -90%
Victorian Plumbing (AIM:VIC) · Jun 2021 · 986.26 · 298 · -85%
Deliveroo · Apr 2021 · 4,851.55 · 1,500 · -76%
Trustpilot Group PLC (LSE:TRST) · Mar 2021 · 1,102.81 · 473 · -76%
Alphawave IP Group · May 2021 · 2,473.67 · 856 · -64%
Wise · Jul 2021 · 7,956.72 · 0 · -43%
Moonpig Group PLC (LSE:MOON) · Feb 2021 · 1,488.19 · 491 · -43%
Fix Price Group Ltd (LSE:FIXP) · Mar 2021 · 5,971.64 · 0 · -39%
Petershill Partners PLC (LSE:PHLL) · Oct 2021 · 4,048.44 · 1,012 · -38%
WAG Payment Solutions · Oct 2021 · 930.17 · 186 · -36%
Conduit Holdings · Dec 2020 · 836.11 · 821 · -34%
Network International · Apr 2019 · 2,605.00 · 1,218 · -33%
Oxford Nanopore · Oct 2021 · 4,753.71 · 350 · -31%
Dr Martens PLC (LSE:DOCS) · Feb 2021 · 4,540.00 · 1,295 · -30%
Bridgepoint Group PLC (LSE:BPT) · Jul 2021 · 3,984.62 · 789 · -29%
Softline Holding PLC · Nov 2021 · 992.92 · 334 · -17%
Baltic Classifieds · Jul 2021 · 1,000.00 · 330 · -15%
Huatai Securities · Jun 2019 · 1,605.81 · 1,338 · -11%
Trainline · Jun 2019 · 1,994.82 · 1,093 · 4%
Helios Towers · Oct 2019 · 1,180.00 · 250 · 6%
Calisen (since taken private) · Feb 2020 · 1,317.89 · 329 · 9%
Auction Technology · Feb 2021 · 817.90 · 273 · 36%
Big Technologies PLC (AIM:BIG) · Jul 2021 · 807.73 · 202 · 38%
Darktrace · May 2021 · 2,232.42 · 165 · 52%
Airtel Africa · Jul 2019 · 2,743.45 · 609 · 55%
Bytes Technology · Dec 2020 · 835.31 · 647 · 58%
Joint Stock Company Kaspi.Kz · Oct 2020 · 6,150.09 · 773 · 61%