THG has entered a financial and trading collaboration with SoftBank Group which involves a division of the Japan-headquartered technology investor committing about $730m to a $1bn fundraising the Manchester-headquartered e-commerce platform is conducting to support its plans for acquisitive growth.
SoftBank has also been granted an option for a $1.6bn investment in THG Ingenuity in exchange for a 19.9% stake in the THG subsidiary with the aim of establishing potential collaboration arrangements drawing on the opportunities among affiliate businesses of THG and SoftBank.THG Ingenuity is a yet to-be formed, THG owned and controlled subsidiary group, comprising the Ingenuity platform IP and operating trade and assets. To effect the SoftBank investment- through its SB Management subsidiary THG Ingenuity will be required to be a separate legal entity capable of receiving the investment and this process has already commenced.
THG believes that a separation of its key businesses will maximise shareholder value and intends to undertake a review of the group structure with the intention to commence a separation within 15 calendar months.
The group also announced the conditional agreement to acquire Bentley, a developer and manufacturer of prestige skincare and haircare products for $255m.
To support its M&A strategy, THG announced a capital raising which is expected to raise gross proceeds of about $1bn, consisting of a subscription of approximately $730m from SoftBank and an institutional placing of $320m, with long-standing, technology-focused shareholder Sofina expected to participate in the placing in an amount of up to $85m.
THG executive chairman Matthew Moulding said: “We are delighted to announce this financial and trading partnership opportunity with SoftBank, one of the world’s leading technology investors, recognising both the capability and inherent value of our proprietary technology platform, Ingenuity. The trading partnership opportunity is particularly exciting, providing Ingenuity with an unparalleled global growth opportunity. Furthermore, the combination of the acceleration of growth within Ingenuity and its separation into a distinct entity will enable THG to unlock significant incremental shareholder value over time.
“The capital raise will provide meaningful capital to accelerate our strategic growth ambitions across our whole business. The acquisition of Bentley materially increases our capability in beauty manufacturing and product development, and strengthens our position as the leading digital beauty business globally.”