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Kelso Group Holdings PLC on Thursday said it has increased its stake in THG PLC and urged the company to take steps improve its market value. Kelso is an investment firm focused on UK small and mid-cap companies. THG, a Manchester-based online beauty products retail platform, is Kelso’s first such investment. Kelso made its debut on the London Stock Exchange as Insight Business Support PLC back in July 2021. In November of last year, it changed its name to Kelso. In January, Kelso purchased 5.0 million shares for a 0.4% stake in THG. Kelso said it paid an average of 54.5p per share, so forking out around £2.7 million in total. On Thursday, Kelso said it has purchased an additional 2.4 million shares in THG, bringing its total interest to 7.4 million shares. It did not say how much it paid for the new THG shares. THG traded 6.0% higher at 67.63 pence each in London on Thursday afternoon, giving it market capitalisation of £878.6 million. The stock remains well below water from its initial public offering price back in in 2020 of 500p. ‘We believe that 2023 will be a positive year for THG as many of the operational headwinds experienced during 2022 continue to reverse,’ Kelso said. ‘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.’ Kelso said it continues to ‘urge’ THG to review strategic options, alongside focussing on cash generation. As part of this, Kelso asked THG to consider a share buyback programme, as it views THG’s share price as ‘undervalued’. The investor also wants THG to move to a premium listing on the London Stock Exchange from its current standard listing. Back in 2021, THG had said it planned just such a move, but a year and a half later, it remains a standard listing. The ’golden share’ held by Matthew Moulding, the founder and chief executive, prevented a premium listing at the time of its IPO. This means THG is excluded from FTSE UK indices. Separately, Kelso said it plans to raise up to £3.0 million via a placing of shares at 2.5 pence each. Kelso shares were trading 22% lower at 2.75p each in London on Thursday afternoon. The company said it expects to close the placing during April and to use the proceeds to continue to execute its mandate to engage and unlock trapped value in the UK stock market. In April, Kelso will announce its 2022 results. Kelso Chief Executive John Goold said: ‘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.’ Copyright 2023 Alliance News Ltd. All Rights Reserved.
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