Business

Hut Group shares soar 30% on first day’s trading in the biggest London IPO for seven years

Matthew Moulding with Prime Minister Boris Johnson
Hut Group
Mark Shapland
16 September 2020

The Hut Group's shares have soared more than 30% in the company's first morning of trading.

The company, which helps sell retail brands, including Lookfantastic and skincare group ESPA, sold 376 million shares at 500 pence each to raise £1.88 billion in a float that values the firm at £5.4 billion.

The float is the biggest since Royal Mail in 2013. In early trading shares were up 30% or 130p at 630p.

While The Hut Group's market debut gave a boost to what has been a terrible 2020 for new listings, with the COVID-19 pandemic driving European IPO volumes down to their lowest level in eight years, some investors have raised concerns over the structure of the deal.

For example, Matthew Moulding will remain both chairman and chief executive of the company, while the shares are to be issued in different "classes", allowing him voting powers vastly superior to most other London-listed companies.

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These structural features mean that The Hut Group will not be granted a so-called premium listing and will not be eligible for the FTSE 100 despite being big enough for the blue-chip index.

Despite these concerns BlackRock, Henderson Global Investors, Merian and the Qatar Investment Authority agreed to buy £565 million of the shares offered.

While private equity owner KKR is selling its entire stake worth £448 million.

Michael Hewson, analyst at CMC Markets, said: “As the biggest IPO since Royal Mail was launched back in 2013 The Hut Group will be closely scrutinised in terms of not only early demand, but also the sustainability of the business model.

“Time will tell as to whether the valuation is a solid one, or whether KKR has made the right move in selling out of their entire stake."

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