- Kelso group aims to unlock ‘trapped value’
- Suggests separating the businesses
- THG shares still down over 85% from IPO
Shareholders in brand platform provider THG (THG) extended a warm welcome to specialist investment firm Kelso Group (KLSO) after the latter revealed it had taken a small stake with an offer to ‘help unlock value’ in the business.
Shares in THG jumped as much as 7% to 58.5p before easing back to trade up 4.5% at 57p by mid-morning.
WHO IS KELSO GROUP?
Despite having a market value of just £10 million compared with THG’s £825 million, newly-listed Kelso boasts some heavyweight talent with experience of bringing about change ‘where existing shareholders are unable or unwilling to do so themselves’.
Recently-appointed non-executive chairman Sir Nigel Knowles is currently chief executive of legal services firm DWF (DWF) and is a former co-chairman and senior partner of DLA Piper where he spent over 38 years.
Chief executive John Goold, a chartered accountant and corporate finance expert, is the former boss of Zeus Capital, having helped raise over £5 billion for the firm's clients.
Kelso says its mission is to ‘identify, engage and unlock trapped value’ in UK small cap and mid cap companies where it believes the value of the business is ‘significantly greater than its current value’.
WHY HAS KELSO TARGETED THG?
Kelso has taken a 0.4% stake in THG with the purchase of five million shares at 54.5p, saying it believes the company is ‘hugely exciting but significantly undervalued’.
It hints that hiving off parts of the group could provide THG shareholders with ‘significant upside’ from the valuation of the group today compared with its £5.4 billion valuation at IPO back in September 2020.
In particular, Kelso believes the Nutrition business, which incorporates the MyProtein and MyVegan brands, could be worth ‘in excess of the entire current market capitalisation of THG’ based on valuations of deals in the sector in the last few years as consumers shift away from sugary treats to health and nutrition.
It also notes THG rejected more than one takeover approach last year, referring to a non-binding offer price of 170p or more than three times today’s share price.
