SoftBank writes off £450mn after dumping THG stake

SoftBank is dumping its entire stake in troubled UK ecommerce company THG, crystallising a £450mn loss for the Japanese technology investment group.

The disposal comes as SoftBank is liquidating its internal hedge fund after a series of bad bets, including an 8 per cent stake it bought in THG in May 2021 for about £481mn.

THG said on Monday that SoftBank will pocket £31mn in proceeds after agreeing to sell 67.8mn shares to Qatar’s sovereign wealth fund. Matt Moulding, THG’s co-founder and chief executive, agreed to buy the remaining 12.8mn shares from SoftBank.

The stake sale is set to take place on Thursday at a price of 39p, below the company’s 45p closing price on Monday.

THG shares have plunged over 92 per cent since SoftBank agreed to purchase a stake in the company, as the business suffered from slowing sales and contracting margins.

Founded in 2004, THG is mainly focused on direct-to-consumer sales of beauty and nutrition products. It was previously known as The Hut and originally made its money selling CDs and DVDs online for other retailers.

SoftBank already terminated an agreement that would have allowed the Japanese investment group to acquire a fifth of THG’s Ingenuity technology division for $1.6bn.

Moulding said: “We at THG extend our thanks to SoftBank for their support as a financial and commercial partner, and we will continue to benefit from the relationships formed across their international technology portfolio.”

The THG investment was led by former SoftBank investor Akshay Naheta, who was running SB Northstar, a hedge fund unit inside the group which is being shut down after racking up close to $6bn in losses.

In addition to its role in the infamous “Nasdaq whale” trade, SB Northstar also made disastrous bets on Norwegian educational software company Kahoot and Swedish software group Sinch.

Naheta left SoftBank in April and is based in Abu Dhabi, where he is said to be in talks to join Rajeev Misra, who is stepping away from his role at SoftBank and starting a new investment fund backed by a trio of Abu Dhabi groups.