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(Alliance News) - Kelso Group Holdings PLC on Thursday said it has upped its stake in THG PLC and urged the company to improve its market value.
Kelso is an investment firm focused on UK small and mid-cap companies. THG is the company's first such investment. Kelso made its debut on the London Stock Exchange as Insight Business Support PLC back in July 2021. In November of last year, it renamed to Kelso.
In January, it purchased 5.0 million shares for a 0.4% stake in THG. Kelso said it paid an average of 54.5p per share, so forking out around GBP2.7 million in total.
On Thursday, Kelso said it has purchased an additional 2.4 million shares in THG. Bringing its total beneficial interest to 7.4 million shares. It did not say how much it paid for the shares.
THG shares traded 6.1% higher at 67.72 pence each in London on Thursday afternoon.
Kelso said: "We believe that 2023 will be a positive year for THG as many of the operational headwinds experienced during 2022 continue to reverse.
"Whilst we commend THG's board and management's efforts, we believe there are more actions they can take to ensure the share price reflects what we strongly believe to be intrinsic value. Specifically, we would like to see the board deliver on commitments made to investors."
Kelso said it continues to "urge" THG to continue to review strategic options, alongside focussing on cash generation. As part of this, Kelso recommends THG to consider a share buyback programme, as it views THG's share price as "undervalued."
Away from its THG investment, Kelso said it plans to raise up to GBP3.0 million via a non pre-emptive placing of shares priced at 2.5 pence each.
Kelso shares were trading 22% lower at 2.75p each in London on Thursday afternoon.
It expects to close the placing during April and to use the proceeds to continue to execute its mandate to engage and unlock trapped value in the UK stock market.
In April, Kelso will announce its annual results for 2022.
Kelso Chief Executive John Goold said: "The current stock market conditions suit our strategy of finding undervalued situations where we believe through our focused efforts, we can help unlock value. We continue to believe that THG represents a great opportunity to make significant returns for Kelso shareholders."
By Sophie Rose, Alliance News reporter
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