The sensational news about THG (formerly The Hut Group) was unstoppable.
Matthew Moulding’s rag-to riches story, his Instagram photos of his ripped torso, his dealmaking skills, and the creation of a technology business that the UK can be proud of. The generous bonus program seemed inexorable.
The hyperactive media went crazy when Mr Moulding’s fast-growing beauty and health company was listed on the London Stock Exchange last year. It also included a potential highly profitable software arm.
The company’s vast portfolio of brands included ESPA, Perricone MD, and Illamasqua as well as the online beauty retailer Lookfantastic.
Although the bubble burst now, in fact, there was likely a gradual deflation that lasted several months.
THG has lost billions after several challenges to its corporate structure, governance, and the deal it made with Softbank to purchase a portion of its Ingenuity technology business.
However, Mr Moulding is hinting that he might take the company back private, just a little more than a year after it was floated. This suggests that the story is not yet over.
THG is a publicly-owned company. However, until recent Mr Moulding held a “golden shares” which gave him the rare power to block a takeover.
THG’s founder has 22% ownership. He is also the chairman and chief executives. This contradicts City guidance regarding corporate governance that recommends they should separate the roles.
THG also pays Mr Moulding about £19m a year after he took control of some of the company’s properties around the time of the float, which he now leases back to the business.
Mr Moulding and his wife Jodie also have a £100m personal loan from Barclays, which had been secured against THG shares.
The company says that the couple no longer use THG shares to secure the loan. However, it is still believed active.
- Shares of THG increase as the founder suggests that it will go private
- Hut Group boss dumps ‘golden share’ in overhaul
This corporate governance system has been causing anxiety for some time.
M. Moulding gave an update to shareholders last month on trading and more specifically the Ingenuity Technology division.
Investors didn’t like what was said. There are actually reports that they did not hear much because there was very little in the update that was relevant to their business.
THG sharesholders demanded changes. THG stock prices plunged 35% because investors were able to vote with their pockets. At one point, THG’s value sank almost £2bn.
THG then announced that Mr Moulding would be removed from his powers, and it was reexamining its corporate governance.
It seemed that The City won. This seemed like a small defeat to the 49-year old billionaire, who is obviously determined to win back.
His prospects as a young man were dim when he was brought up in Lancashire, on the other side of the tracks. His father fixed driveways, and he sold items he bought at market from houses that had been cleared.
Matthew was kicked out of college because he had committed truancy. He managed to persuade his way through college and finally graduated as an accountant chartered by the university.
John Caudwell (the Phones4U billionaire) was where he started his business career. M. Moulding was able to use some of the proceeds from Mr Caudwell’s sale to start his own business.
Moulding claims that his inspiration to create his company was when he bought his first CD online, in 2003.
It was so much more affordable than buying one in a store, that he made the decision to start his own business.
THG launched in the early 30s by John Gallemore (now chief financial officer).
With an initial investment of £50,000, Mr Moulding began by selling CDs from the Channel Islands to avoid VAT, making use of a then-prevalent tax loophole which has since been closed.
Since then the company has undergone many transformations, including a departure from its roots, which was when music streaming and the decline of the CD market began.
He made use of the already-built infrastructure and decided to move on to products for beauty and health, as they are not fragile and perishable, and also had large profit margins.
The company grew rapidly by snapping up skincare and lifestyle brands, while also operating online platforms for other companies, including Honda and Nestlé.
Although Mr Moulding is certainly making a lot for himself, the stock exchange flotation made millions of dollars for 74 other employees. He has donated a lot of money to charity since the stock market flotation.
Unusually, his latest change in direction was noted in an interview with GQ, a men’s magazine – which is not usually required reading for financial analysts.
Maybe it is that star quality that will carry him through his next challenge.
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