SoftBank’s $2.3 billion deal pushes shares in e-commerce group higher as London stocks slump

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Japanese investment giant Softbank’s $2.33 billion investment in THG prompted shares in the online fashion retailer to soar on Tuesday, far outpacing other stocks in London, which faced a down day of trading.

Shares in THG
THG,
+11.07%
— formerly known as The Hut Group — rose as much as 19% before settling around 13% higher.

A wholly owned subsidiary of SoftBank
9984,
-6.51%,
SB Management, will take a 19.9% stake in a yet-to-be-formed THG subsidiary for $1.6 billion, the British group said on Tuesday. THG went public in September 2020.

The deal values THG’s Ingenuity division at $6.3 billion. Ingenuity is a business-technology platform with a focus on direct-to-consumer services for other companies, which THG’s billionaire chief executive Matthew Moulding has previously described as a social-media influencer platform.

SB Management is also taking a separate, $730 million stake in THG via a share offering, bringing Softbank’s total investment in THG to $2.33 billion.

Also read: Deliveroo, Hut Group and Naked Wines have all been pandemic winners. Here comes the hard part.

The Hut Group was a rare riser in London trading on a day when equities were lower across Europe. By midday, only two of the constituents of London’s FTSE 100 — the index of the top U.K. stocks by market capitalization — were above flat. The FTSE 100
UKX,
-2.90%
was down more than 2.7%.

The stock market slide in London mirrored a similar performance among Asian equities on Tuesday, and followed a broad selloff in technology stocks in the U.S. on Monday. The Nasdaq
COMP,
-1.88%
closed 2.55% lower on Monday as investor sentiment was spooked by inflation concerns. On Wednesday, the key U.S. inflation measure — the Consumer Price Index — for April will be released, and analysts expect it to rise.

“The market just can’t shake the inflation fears which are clouding the recovery from COVID,” said Russ Mould, an analyst at AJ Bell.

“Some days investors appear relaxed about inflation risks and the possibility of central banks having to lift rates and withdraw stimulus. Today is not one of those days,” Mould added. “Surging commodity prices are acting as a canary in the coal mine for inflation — with the huge infrastructure and stimulus packages in the U.S. a key contributing factor.”

There was a particular weakness in companies exposed to commodity prices — especially miners and major oil companies — as well as tech groups and travel stocks.

Plus: Stocks fall across Europe and Nasdaq futures tumble 1%, as inflation concerns and selloff sentiment spread

The London-listed miners Rio Tinto
RIO,
-3.08%,
Glencore
GLEN,
-3.08%,
Anglo American
AAL,
-2.61%,
BHP
BHP,
-3.16%,
Antofagasta
ANTO,
-1.96%,
and Polymetal International
POLY,
-2.08%
were all lower, alongside major oil companies BP
BP,
-3.25%
and Royal Dutch Shell
RDSA,
-3.83%.

London-listed tech groups fell, including Avast
AVST,
-3.67%,
which makes security software, as well as food-delivery company Just Eat Takeaway.com
JET,
-1.93%
and high-tech grocer and robotics logistics specialist Ocado
OCDO,
-3.93%.

International Airlines Group
IAG,
-6.84%
— which owns British Airways — as well as airlines Ryanair
RYA,
-3.65%,
easyJet
EZJ,
-4.53%,
and Wizz Air
WIZZ,
-4.79%
were among the battered travel stocks, alongside hotel operators Whitbread
WTB,
-4.39%
and InterContinental Hotels Group
IHG,
-4.24%.

Shares in bank NatWest
NWG,
-3.17%
fell 2.5%, after the government trimmed its stake in the lender to below 55% in a £1.1 billion sale. NatWest came under public ownership amid a government bailout in the 2008-09 financial crisis, and is on a slow road to returning to private-sector hands. The sale at 190 pence ($2.7) per share represents a loss for U.K. taxpayers after the government bought stock for around 500 pence per share more than a decade ago.



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