Kelso Group Holdings PLC Update on THG Investment and Placing (9829W)
21 Avril 2023 - 8:00AM
UK Regulatory
TIDMKLSO
RNS Number : 9829W
Kelso Group Holdings PLC
21 April 2023
21 April 2023
Kelso Group Holdings Plc ("Kelso" or the "Company")
Update on THG Investment and Placing
Kelso today announces that it has acquired further interests in
shares in THG plc ("THG"), through a Contract for Difference
("CFD"), taking Kelso's total economic interest in THG shares (held
through a mix of ordinary shares and CFDs) to 8.0 million
shares.
One of the key drivers for Kelso's investment in THG, as
announced on 31 January 2023 (the "January Announcement"), was
around the significant intrinsic value of the nutrition business
(referred to going forward as "MyProtein"), which in part, we
referred to in the January Announcement is caused 'by the shift in
consumption away from chocolate and sugar to health and
nutrition'.
We note yesterday's public statement by the Healthy Markets
Initiative, a group of 26 global institutional investors with
assets under management of over $5.3 trillion as outlined by
Alistair Gray's article in the Food and Beverage section of the
Financial Times and on the BBC website on 19 April 2023. These
investors are engaging with the world's largest food manufacturers
to promote changes in their strategy away from an over-reliance on
sales of less healthy products. The Financial Times article refers
to potential 'systemic risk' to companies that are over reliant on
sales of these unhealthy foods. This article encapsulates exactly
what Kelso referred to as the 'chocolate and sugar problem' and the
need for these companies to diversify their revenues into healthier
products for long term success. In our view, this strategic shift
is akin to the major oil companies diversifying into renewable
energy and highlights the huge relevance and underlying value of
THG Nutrition.
Kelso has identified 12 global food and beverage companies(1)
that it believes could be deemed overly focussed on sales of
chocolate or high sugar content products. The average market
capitalisation of the 10 listed companies identified is $96.1
billion with an average revenue of $30.5 billion, the remaining 2
businesses being private. Kelso calculates that the average
enterprise value to sales of these companies is 4.3x. THG has
announced this week the sales of its nutrition business, including
MyProtein, as being c$800m for the year ended 31 December 2022.
Kelso identifies two listed pure play global health nutrition
companies, being Celsius Inc ("Celsius") and Bellring Brands Inc
("Bellring"). Celsius, with sales of $654 million, trades on an
EV/Sales of 10.8x and Bellring, with sales of $1.4 billion, on
3.9x.
Matthew Moulding, the CEO and founder of THG, has consistently
tried to explain the true value of the nutritional business. In
addition, the food and beverage companies we refer to above have
vast offline global distribution networks that could significantly
increase the offline sales of MyProtein. In return, we strongly
believe, that MyProtein's direct to consumer digital model would be
highly attractive to many of these companies.
Any forthcoming offers for THG as a whole must clearly reflect
this underlying value and in the event that an acceptable offer is
not forthcoming then a separation of MyProtein should be
considered, alongside a potential partnership and minority
investment from companies such as those highlighted. Kelso believes
that THG's nutritional business is likely ultimately to end up
being owned by one of the large global food and beverage companies,
all of which have already begun investing in nutritional, wellness
and healthier assets to improve the mix of their sales between
nutrition and chocolate or sugar products. All those transactions
again support Kelso's sum of the parts view of THG.
Kelso will provide an update on its Proposed Placing, as
announced on 30 March 2023, next week alongside the issue of its
financial statements for the period ended 31 December 2022. It is
expected that current shareholders will subscribe for the majority
of the raise.
(1) Nestle, Coca Cola, Pepsi, Mondelez, Mars*, Hershey,
Ferrero*, General Mills, Lotus Bakeries, Monster, Kraft Heinz,
Keirig Dr Pepper * Denotes private
For further information please contact:
Kelso Group Holdings Plc +44 (0) 75 4033 3933
John Goold, Chief Executive Officer
Mark Kirkland, Chief Financial Officer
Jamie Brooke, Chief Investment Officer
Zeus (Broker) +44 (0) 20 3829 5000
Nick Cowles, Matt Hogg (Investment Banking)
Ben Robertson (Corporate Broking)
About Kelso
Kelso was established in 2022 to identify, engage and unlock
trapped value in the UK stock market. Kelso's strategy is to invest
in situations where there is an anomaly between the intrinsic value
and prospects of a company and its stock market valuation. Kelso
will look for situations where it believes the sum of the parts of
a business is greater than the current value. The Company completed
a fundraising of GBP3.0 million in January 2023. Kelso believes
that the current market conditions are such that there are
situations where UK listed companies' valuations are not
appropriately matched to their underlying intrinsic value. There
may be instances where Kelso itself could be used as a vehicle by
an undervalued company to spin off a subsidiary into its own
listing. Such a transaction would undoubtedly constitute a reverse
takeover for Kelso.
END
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