Member Info for Okehurst1

Some investors place £ in AIM funds for IHT purposes, others don’t want to hold private company shares with reduced protection, numerous reasons depending on personal investment criteria, so those funds including AIM tracker funds etc …

It’s not to say the above cohort will sell their RemainCo shares and they will obviously get more by default of the demerger but this group won’t be able to hold Ingenuity shares, they have no choice.

Make your own mind up if Baldertons were supportive of the demerger but they didn’t participate in the fund raise

But that’s the issue, they didn’t have a choice

The valuation of Ingenuity was set low, it wasn’t put up for sale in an open market, THG shareholders don’t really know what the true value of Ingenuity is and in Baldertons case they can’t by default of their Articles hold shares in private companies, other funds who can only invest in public Co’s will have the same issue, MM of course knows this and him and partners have nicked Ingenuity in affect for free with a potential £4B 10 year contract with Remain, mentioned the other week it’s genius.

Baldertons have been well done over, they can’t hold private shares within their articles of association ,guess others under 3% II’s in same boat

MM knew exactly what he was doing

So MM/Chums are now on to nick Ingenuity for just £10M ?

Steve, think you’re right, it’s personal with the City vs MM but he doesn’t really care he’s nicked Ingenuity for £25M and he’s in the driving seat of Remain who will be contracted to pay him £400M a year based on recent numbers

However on the basic fundamentals we must be close to the bottom now ? The market wants to see the circular as well.

Touched on this yesterday

The market may be pricing Remain co at the market rate of 11X FCF

Mid point between current FCF and forecast for 2025

Give or take THG is sitting on that valuation metric right now

Unless other news due THG is on the money today , FCF for dividend will eventually be considered by the market once everything settles down

Surely this must be the bottom ? 40p ish ?

Money mad, fair point

Wood £EV is about £850M, so a decent FCF as a percentage

Guess the uncertainty of the audit review is what spooked the market

Hi Polish

I think there is a trade here but why is share falling ?

If 11 X FCF is considered then THG is fully valued on an £EV basis on historic numbers

But if £111M FCF could be achieved and they paid a dividend it looks cheap

Not even touched on the value of the tax losses.

I wonder if Apollo agreed the take out price, then MM tried to buy Ingenuity as part of the deal, Apollo wanted the price he quoted so he walked as he wouldn’t pay it but he could tell the market Apollo valued Ingenuity at a relatively high valuation to the THG market cap at the time ?

18 months on and he is getting Ingenuity for a £25M valuation in affect plus a potential £4B 10 year contract and he is still the largest shareholder in Remain co

It’s one belter if a deal for him

JCB

Remain co will do £77M to £111M FCF next year based on THG numbers

Make your call on where the number will be, if it was £111M they could pay out £50M for a dividend and Remain co is a 10% yield, it’s not going bust

The market wants comfort/ term on the duration of the £400M contract with Ingenuity and can Remain improve its FCF from £77M

Steve made a good point the other week regarding FCF multiple as a valuation metric being 11 if I remember correctly for Nutrition, not sure Beauty would be but let’s go with 11 ? Stand corrected but that was my take

So on £77M FCF for Remain Co based on current numbers stacks to £EV today

As Steve pointed out they should get to £111M FCF next year but it doesn’t look like the market is building that in until it sees the detail

I’ve been in /out THG twice so used to Steve’s posts over the years but Tbf the poster has some good points when they ain’t complaining

I am currently still on the fence trying to work out what’s the value of Remain Co, appears cheap but it’s fully valued on an £EV /FCF multiple of 11 day 1 demerged

I thought that Cong but that’s a big aggregated number on a straight line basis, it’s a whopping £4B

If Remain was going to market on a 10 year deal would another provider sharpen their pencil for that size of contract

So then it’s back to the non executive directors, are they able to challenge MM ?

Without that £400M of revenue a year Ingenuity is not viable

We know THG a has always been leaky but the sell off looks overdone, it’s just will it drop lower ? No Idea

The market needs to see the term of the £400M a year based on known revenue that Remain co has to pay MM/ ingenuity, there is a chance some in the market know the length / term ?

MM has ripped out Ingenuity to go private for a net £25M with his chums

Investors now wait to see the term of the £400M per annum charged to Remain Co, it’s a big number

How many years does Remain Co have to pay him before entering into an open competitive tender process ?

We will soon find out

Trying to understand the logic of the continued fall?

Obviously MM has a big role to play as it’s not fully understood will he still be Defacto director controller in Remain co?From the City point of view he is a liability and Uninvestable and a control freak can’t see him having no involvement

A potential outcome could be Selkirk make a move to remove him from the BoD, they only need 50.1% to take control via an EGM

The next question is can they muster the 50.1%?

Is the market valuing Boo on a EV basis ?

And to work a multiple of FCF to EV value ?

BOO currently £600M EV

FCF unknown as yet with an X multiple for an on line fashion chain

Take ASOS, £540M EV after Top Shop sale reduces debt

FCF last year was £30M plus

Has the market looked ahead and placed a marker of £50M FCF and placed 11X as EV valuation?

Used 11X as it’s used for other online businesses like Nutrition but not sure if fast fashion is as high but for this example

Any views ?

Nutrition will pay near on £175M a year to Ingenuity, what we we don’t know is if that contract was competitively tendered, maybe a 6 year deal worth near £1B would it cost Nutrition

25% of cost of sale?

No idea myself but the duration of the contract will be one to watch for ?

Ingenuity will require further capital, so private fund raising without the regulatory requirement .

No requirement to Bid for the outstanding shares once MM reaches 30%

He can just nibble away to increase his stake

Once MM/ Insider Whales get to 75% of Ingenuity, well before a planned exit event / IPO then they can mop up the 25% outstanding via scheme of arrangement

That’s the punt you make holding Ingenuity, even less protection than in a publicly listed company

MM enjoying his jolly and why not, it’s been a great bit of business for him

He mugged the City for £Billions at the IPO

Ripped out the property for himself so THG pays him £M’a

He mugged SoftBank and others for £1B to fund ingenuity

He’s nicked Ingenuity back for a net £25M

He will place long term contracts worth £400M a year for X amount of years with Remain Co

Baldertons and I guess other II’s won’t be able to hold Private shares so have to sell their Ingenuity entitlement and he gets even more Ingenuity

If he wants to buy more Remain he can do so in the market post event

It’s ruthless but no one can argue it’s not genius how he has done it

Steve made a good point this week that the market can also considering the value of Remain Co on FCF multiple moving forward

Assume £110M FCF if MM is providing the facts, any views of the multiple ? Would Beauty and Nutrition command the same ?