Tech

A division of SoftBank invests $1.6 billion into an e-commerce start-up's new ‘influencer platform’

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Key Points
  • SB Management, a division of Japanese tech giant SoftBank, is investing $1.6 billion into a planned technology division of British e-commerce start-up THG.
  • The deal will give SBM 19.9% of THG Ingenuity, valuing it at $6.3 billion.
  • Formerly known as The Hut Group, THG owns several online beauty and nutrition brands such as Lookfantastic, Mankind, and Myprotein.

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SoftBank Group founder, chairman and CEO Masayoshi Son announces his group's earnings results on May 9, 2019, in Tokyo.
Alessandro Di Ciommo | NurPhoto | Getty Images

SB Management, a division of Japanese tech giant SoftBank, is investing $1.6 billion into a planned technology division of British e-commerce start-up THG.

The deal, announced to THG shareholders on Monday, will give SBM 19.9% of THG Ingenuity. It values THG Ingenuity at $6.3 billion, which is roughly what parent firm THG was valued at when it floated on the London Stock Exchange last year.

Formerly known as The Hut Group, THG owns several online beauty and nutrition brands such as Lookfantastic, Mankind, and Myprotein. It also sells its e-commerce software to companies including Unilever.

Matthew Moulding, the billionaire founder of THG, described THG Ingenuity on a media call as a "social media influencer platform" to promote products, according to The Guardian. That includes brands sold by THG, as well as brands sold by other companies. Moulding added that SoftBank's investment provides THG Ingenuity "with an unparalleled global growth opportunity."

"THG Ingenuity is a yet-to-be-formed, THG owned and controlled subsidiary group, comprising the Ingenuity platform IP and operating trade and assets," the parent company said.

"To effect the SBM investment, THG Ingenuity will be required to be a separate legal entity capable of receiving the investment and this process has already commenced."

In a bid to reassure investors, THG said "it believes that a separation of its key businesses will maximize shareholder value."

A spokesperson for THG described Ingenuity as a platform that "powers" the company's own brands, as well those of third-party clients. The spokesperson said it specifically provides "digital services, including hosting, studio content, translation services and beauty product development and manufacturing."

SoftBank to buy THG shares

SBM is also taking a $730 million stake in THG itself, which is raising $1 billion in fresh equity to fuel its worldwide expansion efforts.

The investment will give Masayoshi Son's company, which has also invested in the likes of Uber, Slack and WeWork, roughly 10% of THG, which was founded in 2004 and is headquartered at Manchester Airport. 

In 2020, THG's sales soared more than 40% to £1.6 billion ($2.3 billion). However, it still recorded a pretax loss of £535 million.

The company also announced Monday that it will acquire New Jersey-headquartered beauty product manufacturer Bentley Laboratories for $255 million. It said the acquisition will boost revenues by $77 million next year.

"The acquisition of Bentley materially increases our capability in beauty manufacturing and product development," said Moulding.

Shares of THG, which is valued at around £6 billion, soared 14% on the news, to over £7 per share on Tuesday.

CORRECTION: This article has been updated to correct the spelling of the name of THG founder Matthew Moulding.