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An activist shareholder has set out what it wants THG’s board to deliver “to ensure the share price reflects what we strongly believe to be intrinsic value”.
Kelso Group first snapped up a 0.4% holding in the Manchester-headquartered online retail and technology giant in January.
The group is headed by former Zeus chief executive John Goold, chaired by former DLA partner Sir Nigel Knowles while other investors include Luke Johnson, Nigel Wray and Umar Kamani.
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In a statement issued to the London Stock Exchange, Kelso outlined four recommendations to THG’s board as well as announcing it had increased its stake to 7.4 million shares.
The group is also to raise a maximum of £3m through a share placement and has appointed former diplomat turned investment banker David Charters as a non-executive director.
Kelso Group said: “Kelso has continued its analysis into THG, including, amongst other actions, a hosted visit to THG’s operations in Manchester and Warrington.
“We believe that 2023 will be a positive year for THG as many of the operational headwinds experienced during 2022 continue to reverse.
“Whilst we commend THG’s board and management’s efforts, we believe there are more actions they can take to ensure the share price reflects what we strongly believe to be intrinsic value.
“Specifically, we would like to see the board deliver on commitments made to investors.
“We urge the board to implement the following readily achievable measures which we believe will be positive for THG’s share price.”
The group has called on THG to move its shares from the standard list to the premium list of the London Stock Exchange. It said the move would “be significantly accretive to shareholder value”.
It has also urged the group to “continue to review strategic options, alongside focussing on cash generation, to ensure underlying value is realised in a practicable timeframe”.
Kelso added that THG should consider a share buyback programme soon after the pending preliminary results announcement. It said a “buyback would demonstrate the board’s confidence in the business”.
Finally, the group said it believes THG’s relationship and communications with the investment community “needs reinvigorating to improve the general understanding of the potential of its business”.
Mr Goold, who serves as Kelso’s CEO, said: “Mark, Jamie and I, with the support of our board, continue to be excited about the prospects for Kelso over the long term and are delighted to announce today a c.50% increase in our interest in THG shares.
“The current stock market conditions suit our strategy of finding undervalued situations where we believe through our focused efforts, we can help unlock value.
“We continue to believe that THG represents a great opportunity to make significant returns for Kelso shareholders.”
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