Now would be a good moment for the THG president to find his voice Nils Bratley

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Charles Allen – Lord Allen of Kensington, former chief executive of ITV – hasn’t been entirely unseen in his new job as independent head of THG, the online nutrition and beauty retailer led by Matt Molding which has had a wild ride (mostly downhill) since arriving in The stock market in 2020 at a price of approximately £5 billion.

Allen shuffled two non-executives from the board and hired two newcomers, thus carrying out his plan upon the March appointment to “refresh” the lineup. But one might also expect the chairman of a company with a THG share price — 52p to a listing price of 500p — to be more vocal. He is, after all, in his £400,000-a-year position to generate confidence among investors that Molding’s tech establishment will be managed more conventionally in the future and turn out well in the end.

Now would be a good moment for Allen to find his voice. As we announce today, Allianz Trade, one of the UK’s largest credit insurers, has reduced its supplier cap to THG. This development may just be a bit of the housekeeping on Allianz’s part, but it’s the kind of thing that would normally prompt a retailer’s chairman into a full statement of confidence.

Allen can also explain to frustrated THG investors why Molding still clings to the “golden share” of the blocking takeover rights he promised to give up. That pledge was in October 2021, a week after a disastrous City bid that crashed the share price 35% in the afternoon. “In furtherance of good corporate governance, Molding confirmed its intention to divest its private equity rights,” THG said.

It was a huge concession, and it was supposed to pave the way for THG to advance to shift from a standard stock market listing to a premium listing, which is what most governance-compliant companies have. The October 2021 statement said the move would take place “in 2022”.

After about 14 months, neither reform has occurred. In terms of promoting the listing, it appears that THG has decided to wait until the FCA finishes Phase Two of its review of the listing system, which won’t happen until next year. But Molding clearly doesn’t have to hang around at FCA: He can revoke his gold stake at any time.

Since the Special Rights would be due anyway in September next year, one could take the view that another nine months of delay wouldn’t matter terribly at this late stage. However, one might expect a high-ranking chairman to explain what was going on. Did Molding claim to retain its blocking rights after the speculative interest on bidding this summer? Has his pledge to annul been reneged? If so, shouldn’t the shareholders be told?

Balance shifts of Capricorn energy

In its latest incarnation as Cairn Energy, the Edinburgh-based oil explorer has had an exciting life threatening to take over the offshore assets of the Indian government. She ultimately won that battle over taxes, an international ruling said, and she was awarded a $1bn (£820m) settlement. Now, though, the board finds itself up against an even more formidable enemy: a significant portion of its shareholders.

Rebranded Capricorn Energy, returning to its Egyptian operations as well as a few exploration interests elsewhere, the company proposed two unpopular mergers in a matter of months. The first, with Tullow Oil, was discontinued in September after resistance from investors. The replacement deal, with Israel’s NewMed, is outwardly better in terms of value but reception has been just as poor.

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Palliser Capital, a hedge fund with a 7% stake in Capricorn, wants to vote out seven of the nine directors, including CEO, Simon Thompson, and chairman, Nicoletta Giadrosi. Just the usual brinksmanship from an upstart American agitator looking to improve merger terms?

This was a possible explanation until the well-respected name of the Legal Affairs and General Investments Department (LGIM) joined the revolt on Tuesday, saying “we believe the change of directors is now justified.” The addition of LGIM’s 4% stake means the rebels now control about a third of the vote.

The panel options seem limited at this point. If Capricorn is really committed to trying to save NewMed’s deal on the same or revised terms, he’ll have to invite a few of Palliser’s proposed directors, some of them credible industry names, to the tent. Giadrosi will have to shift into a chair to make room, and maybe Thompson will be too. There is no point in fighting the facts: LGIM’s intervention has changed the scenario.

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