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Private equity firms Advent International and Leonard Green are exploring a buyout of the struggling online retailer The Hut Group, according to The Sunday Times, with executives from Advent understood to have visited THG’s offices in Manchester.
The news comes as shares in THG jumped 16% on Friday. Sources close to THG said Apollo, another firm linked with a deal, was a less likely buyer. Apollo is already one of THG’s debtholders, sources said.
The Hut Group’s shares have plummeted over the past year, and recently owner Matt Moulding gave up his ‘golden share’ in an effort to appease shareholders.
Shares have slumped 82% amid growing concerns over its corporate governance and cash flows. It now has a market capitalisation of £1.62bn, down from £5.4bn which it was valued at when first floated in 2020.
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 there could be more acceptance of fast-growing firm’s returning minimal profits.
In 2021, The Hut Group saw its full-year revenues soar 91% on a two-year basis, with sales hitting a “record” £2.2bn following a year of investment into its infrastructure, technology and M&A.
However, its FY 2021 adjusted EBITDA margin was in the range of 7.4% to 7.7%, compared to previous expectations of 7.9%.
