THG offloads tech arm Ingenuity for £95.4M amid poor financial performance

THG raises £95.4 million (US$124.5 million) in funding to demerge its technology arm, Ingenuity. The move comes after the e-commerce platform experienced financial losses.

Personal Care Insights previously reported that the company’s stock dropped significantly last month after the British e-commerce company missed earnings estimates. At that time, THG said it might spin off Ingenuity to help boost its bottom line. The stock has dropped over 90% since its IPO in 2020. 

The fundraising exceeded THG’s £75 million (US$97.8 million) target. The money will take the loss-making technology arm private.

Existing shareholders contributed approximately £50 million (US$65.2 million) to the fundraiser, led by Matthew Moulding, CEO of THG, who invested £10 million (US$13 million).

Frasers Group also invested £10 million in an online retailer. In June of this year, THG announced a strategic partnership with Frasers Group, including a multiyear Ingenuity agreement.

Focus on beauty

After the demerger, THG will remain with its beauty and nutrition businesses. Brands include Myprotein, Cult Beauty and Lookfantastic.

The publicly listed company says the move will allow it to become a “simpler, cash-generative business capable of paying future dividends.” It is valued at £642 million (US$837.6 million).

THG reported a 3.6% year-on-year loss in total revenues to £934 million (US$1.2 billion) for six months ending June.

Sales at THG Nutrition declined 10.9% year-on-year to £395 million (US$515.3 million), while THG Beauty increased revenues by 5.7% to £531 million (US$692.8 million).

The company’s beauty sector also implemented the sustainability platform Provenance to validate and amplify green claims for products sold on its Lookfantastic and Dermstore websites.