THG backlash grows as City giant dumps half its shares
CITY giant BlackRock has dumped nearly half its stake in troubled ecommerce group and online retailer THG.
THG’s shares have lost more than three quarters of their value since the start of the year.A source familiar with the situation said that second-largest shareholder BlackRock decided that halving its stake to 5.3 per cent was “prudent risk management”.
The global investment behemoth sold the shares at a
10 per cent discount to Monday’s closing price.
A source noted that BlackRock has held shares in THG long before it floated on the London Stock Exchange last year and that it had still made a “great return” on its investment. The source added that it is still the sixthbiggest investor after the sale.
Formerly known as The Hut Group, THG was the biggest technology flotation ever on the London Stock Exchange.
Initially trading at 500p, the shares hit a high of 837.8p in January before drifting downwards and collapsing in September.
There were concerns about the company’s strategy, its ability to generate a profit, its valuation and its corporate governance and shareholder structures. Russ Mould, investment director at City firm AJ Bell, said: “Asset managers rarely sell after a stock has already fallen so much unless they’ve lost all confidence in the business and/or found something that completely changes the investment case.
“The backlash against THG seems to centre on the fact that people bought into the hype without paying attention to valuation.
“Now difficult questions are being asked about costs and more particularly if the business is broken up into three, as per the suggestion from THG, investors aren’t getting the answers they want – or they are not liking what they see.”
Last week THG said it would hire an independent chairman and give Japanese investment group Softbank a seat on its board.
It was part of a drive to improve transparency and accountability.
Additionally, chief executive and chairman Matthew Moulding – its founder – is giving up his golden share in the company, which guaranteed him control.