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What's going on?

Finally, signs of a pulse from the bedridden British IPO market: ecommerce company The Hut Group (THG) announced plans for an initial public offering on Thursday.

What does this mean?

THG’s best known as an online retailer of health and beauty brands, but it also sells its ecommerce technology on to other companies. And seeing as ecommerce has emerged from the pandemic with a spring in its step, now seems as good a time as any for the company to sell shares to the public.

As part of the announcement, THG revealed its revenue increased by almost 36% in the first six months of 2020 compared to the same time last year. It also mentioned it’d be targeting overall revenue growth of 25% over the next few years. And given that the company put its valuation at just shy of $6 billion, this’ll be Britain’s biggest IPO since 2013 to boot.

Why should I care?

The bigger picture: American-do attitude.

Only seven companies have IPOd in the UK so far this year – the fewest since 2009. US and Chinese IPOs, meanwhile, have been booming, which could be down to a couple of factors (tweet this). In the US’s case, it might be because its stock market is breaking records almost daily, while the UK’s hovers 20% below its peak. That makes companies more inclined to sell shares – and hopefully get a higher price – in the States. As for China, it’s been benefiting from souring relations with the US: the country’s firms are “coming home” and IPOing on the Chinese and Hong Kong stock markets instead.

For markets: What’s the catch?

Turns out THG’s IPO will include an unusual feature: the company’s co-founder and CEO will get a so-called “golden share” that’ll give him the power to veto any attempt at a hostile takeover for three years. And since that means the stock can’t be included in the UK’s key index – and that investment funds which track the index won’t be forced to buy it – demand could end up suffering.

Originally posted as part of the Finimize daily email.

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Rick Rollsed

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