REG - Kelso Group Holdings - Voting intentions at THG AGM

Kelso groupAnnouncement

21/05/2024 07:00

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RNS Number : 1889P  Kelso Group Holdings PLC  21 May 2024

21 May 2024

 

Kelso Group Holdings Plc ("Kelso" or the "Company")

Voting intentions at the upcoming THG Plc AGM

 

Kelso, the main market listed acquisition vehicle, makes the following update
on its largest investment, THG Plc ('THG' or the 'Group').

Highlights

·     Kelso believes THG shares trade at a significant discount to its sum
of the parts value.

·     Kelso believes this discount would narrow significantly if THG
moved from the Standard List to the Premium List and clarified the Group's
future structure to avoid the current conglomerate discount.

·    As a result of the lack of action and clarity on these matters, Kelso
intends to vote against Resolution 5, the re-election of the Chair, whom we
believe should be leading strategy, at the upcoming THG AGM.

·      In the spirit of shareholder democracy, we are making this
statement to encourage shareholder debate.

Kelso remains firmly convinced that the sum of the parts valuation of THG
continues to significantly exceed the current market capitalisation. Of note,
independent broker Peel Hunt recently initiated coverage with a 141p share
price target and a 280p valuation on a sum of the parts basis. It is
disappointing that the THG share price remains below 80p despite the recent
positive annual results and Q1 trading statement. For context, THG listed at
500p and last raised capital at 590p per share.

Kelso has previously expressed a strong belief that shareholder value would be
significantly enhanced if THG were to undertake two specific actions:

(i)         action the commitment to move to the Premium List from the
Standard List which was given on 18 October 2021, the anniversary of the IPO;
and

(ii)           provide clarification of the Group's future
structure.

Whilst THG would be a mid-ranking constituent of the FTSE 250 index, it is the
4th largest company, by market capitalisation, amongst those companies with
their main listing on the Standard List. Companies listed on the Standard List
do not form part of the UK All Share Index or the FTSE 250 Index. Furthermore,
most of the UK active funds including dedicated mid-cap active funds are
benchmarked against the FTSE 250 index and are able to ignore companies on the
Standard List. In June 2022, the FCA said that it was reviewing introducing
one listing regime for issuers, merging the Standard List with the Premium
List. Following a 23-month review of the proposed listing rules reform, this
review is still ongoing. THG has said that it is awaiting the result of this
review. Kelso believes the Board should take control of the timing of this
value accretive decision.  The Board of Kelso believes any cost of transition
would be dwarfed by the value benefits to shareholders and would further
improve corporate governance at THG.

On 16 January 2024, THG delivered a strategy update in which it stated that
the Group's strategy, as previously set out by the Board in 2021, remained
unchanged: "… to provide each division with its own growth and capital
platform, through individual public market listings or partnerships, with THG
retaining significant majority ownership". Disappointingly, after nearly four
years, there has been no demonstrable public progress on this front. The Board
of Kelso finds it particularly remiss that there is minimal comment on
strategic progress relating to this matter in the Group's recent Annual
Report, which spans over 200 pages. Kelso believes that this lack of clarity
is a major factor contributing to the poor share price performance and the
absence of new declarable shareholders to THG's register in the last eighteen
months.

THG's AGM is on 24 June 2024. Each of the Directors of the Board will be voted
on for re-election. In the context of shareholder democracy, we take our
responsibility as a shareholder seriously and believe that these resolutions
require careful consideration from all shareholders rather than just a rubber
stamp. As a result of the lack of action on the workstreams outlined above,
Kelso will be voting against Resolution 5, the re-election of the Chair whom
we believe is ultimately responsible and should be held accountable for
leading THG's strategy and communicating this in a clear and transparent
manner to all shareholders.

Kelso commented:

"Whilst major strategic and structural issues remain unaddressed, the poor
share price cannot be blamed on the London Stock Exchange. As a result of the
lack of progress we plan to vote against the Chair at the upcoming AGM."

 

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, Ed Beddows, John Moran (Investment Banking)

 Ben Robertson (Corporate Broking)
 Camarco                                                   +44 (0) 20 3757 4980
 Billy Clegg, Tom Huddart

 

About Kelso

Kelso was established in November 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, in particular, look for
situations where it believes the sum of the parts of a business is greater
than the current value. Kelso is a shareholder in THG with c.5.5 million
shares.

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