Kelso Group (LON: KLSO) said Tuesday that it has snapped up a 0.4% stake in THG (LON: THG), pushing the company’s shares more than 6% higher.
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THG has become the first investment from Kelso, with the firm purchasing 5 million shares in THG at an average price of 54.5p, representing 0.4% of the company.
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Kelso, which went public in London earlier this month, said THG is a “hugely exciting but significantly undervalued business.”
Kelso Group says on its website that it aims to unlock value in UK small and mid-cap companies. They are led by CEO John Goold, a qualified chartered accountant in London who initially started in corporate finance before moving into equity sales and corporate broking. He held the role of Chief Executive at Zeus Capital from 2012 to 2021.
The investment firm said it believes THG’s actions, through new chairman Charles Allen, to improve governance and expand the executive team will pay dividends in 2023. They also pointed to the recent appointment of Damian Saunders as CFO as another positive due to his knowledge of THG after he was involved with the separation project, which provided the three main divisions their own corporate independence.
Kelso added that the separation provides THG with “significant strategic optionality,” and the potential to separate parts of the business could deliver THG shareholders “significant upside from the valuation of the business today.”
They add that the current stock market value “does not reflect the underlying value of the sum of each of the main THG divisions.”
In particular, they point to the Nutrition business, which incorporates the MyProtein and MyVegan brands, as a division that “alone be worth in excess of the entire current market capitalisation of THG.”
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