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July 20, 2014 5:37 pm
Private equity group KKR is poised to take a stake in fast-growing ecommerce group The Hut in a deal that will value the retailer at £500m.
A consortium led by KKR will pay £100m for 20 per cent of the Manchester-based business, which sells everything from fashion and beauty products to iPads.
The move comes two months after The Hut ruled out an IPO following the poor post-float performance of other online companies that came to market this year, such as Just Eat and AO World, which led to criticism of their initial valuations.
Matthew Moulding, the Hut’s chief executive, said in May that the retailer did not want to “get caught in that crossfire”.
Mr Moulding is expected to increase his stake to just over a fifth as part of the KKR deal, which was first reported by The Sunday Times. Mr Moulding currently owns 17 per cent of the group.
Other investors in The Hut include former Tesco chief executive Sir Terry Leahy and former M&S boss Sir Stuart Rose. It is understood that KKR is buying the stake from some of the retailer’s early backers, including family and friends of Mr Moulding.
The Hut is one of the UK’s fastest-growing companies and posted annual sales of £176m last year, up 34 per cent from the year before. Earnings, meanwhile, rose 48 per cent to £15m.
This year the company is expected to report sales of up to £250m, with earnings before interest tax, depreciation and amortisation of £25m.
The northwest has enjoyed a mini-boom in ecommerce over the past few years, with the Hut emerging alongside Manchester-based fashion retailer Boohoo.com, which floated earlier this year.
Bolton-based white goods retailer AO World – which runs AO.com – has also grown rapidly in recent years, culminating in a float that valued the group at as much as £1.5bn.
Both Boohoo and AO World have enjoyed a volatile start to life as public companies. The duo enjoyed large first-day “pops”, with their shares rallying as much as 60 and 44 per cent respectively.
But both retailers now trade well below their offer prices as investors become less keen on the online retail sector due largely to the recent travails of Asos, which acted as a valuation benchmark for fast-growing online companies.
Shares in Asos have more than halved since their February peak of more than £70 and now trade at £29.90.
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