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Hut Group To Nudge £1bn With New Fundraising

Hut Group To Nudge £1bn With New Fundraising

The Hut Group is poised to reinforce its status as one of Britain's most important digital start-ups by raising new funds that will nudge the company's valuation to close to £1bn.

Sky News has learnt that The Hut Group, which counts some of the UK's best-known retail executives among its investors and board members, is working with investment bankers at Barclays to sell between £50m and £100m of new shares.

The proceeds are expected to be used to fund potential acquisitions, while a small proportion could be used to buy out some minority shareholders in the multi-website retailer.

A source close to the plans said on Friday that the fundraising was expected to value The Hut Group at somewhere in the region of £900m, subject to terms being finalised during the coming weeks.

At that valuation, the company would be catapulted further up the ranks of the UK's most valuable digital businesses, which include the likes of Funding Circle, the peer-to-peer lender, and Asos.com, the online fashion retailer.

The Hut Group is chaired by Richard Pennycook, chief executive of the Co-operative Group, and boasts shareholders including Sir Terry Leahy, the former Tesco chief executive, and Lord Rose, who chairs Ocado and previously ran Marks & Spencer.

The Hut Group was established in 2004 by Matt Moulding, who remains the chief executive, and John Gallemore to provide a technology platform for retailers requiring e-commerce services.

Last year, the company sold a 19.2% stake to Kohlberg Kravis Roberts, one of the world's leading private equity firms, while Balderton Capital, a technology investor, owns an identical stake.

Blackrock, the world's biggest asset manager, is also a shareholder, while at a £900m valuation, Mr Moulding's family's stake - which stood at 21.1% at the end of last year - would be worth more than £180m.

In 2006, the company switched to primarily operating its own websites or acquiring existing sites.

It now sells third-party branded or own-label health and beauty products across 26 websites such as Myprotein, Lookfantastic, Exantediet and Mybag.

Earlier this year, it launched beauty brand Elizabeth Arden's first ecommerce website in the UK and Ireland.

David Cameron and George Osborne lent their support to the Cheshire-based company in January when they visited The Hut Group's distribution site in Appleton, Warrington to endorse a pledge to create 2000 jobs in the north-west during the next three years.

In 2014, the company reported underlying profits up 50% to £22.6m on sales of £244m, a figure which included a 74% rise in international sales.

There has been intense speculation that The Hut Group is planning an initial public offering, although people close to the company said the current fundraising was not a signal that a flotation was imminent.

The Hut Group declined to comment on Friday.