Warrington council lent the billionaire owner of The Hut Group (THG) £151m after the online retailer’s £5bn market listing.
The Cheshire local authority extended a £200m loan facility to a company controlled by Matt Moulding in October, one of the largest council loans on record, from which it has taken three drawdowns totalling more than £151m.
Warrington council’s official documents, prepared last month, revealed the sum was more than 10 times the average loan taken by other local companies, and was paid to a company called Icon 3 Holdco, which is indirectly controlled by Moulding.
It emerged last year that many of THG’s properties had been transferred to Moulding’s personal ownership, meaning he stands to reap an estimated £19m a year in rent from the Manchester-based company.
Moulding, 49, has defied standard corporate governance codes by taking on the role of both chairman and chief executive, and granting himself a “special share” that gives him an effective veto against potential hostile takeovers.
The Warrington loan, which was first reported by the Financial Times, was arranged at around the same time Moulding became a self-made billionaire, when THG went public in a £5bn stock market float. Council loans and investments have come under intense scrutiny in recent years amid deteriorating finances.
THG has steadily diluted the value of its shares while raising funds to support its appetite for new online retail acquisitions. It raised $1.2bn (£880m) through the sale of new shares during its IPO, and in May raised another $1.05bn through a complex $730m investment and cooperation deal with the equity investment division of Japan’s SoftBank alongside a $320m sale of stock to other institutions.
The listing earned Moulding an £830m share award, which is understood to be one of the biggest payouts in UK corporate history.
The entrepreneur and Conservative party donor, who grew up in a house near Burnley in Lancashire with an outside toilet, has amassed an estimated personal paper fortune of £1.9bn through his 25% stake in THG. One of his first forays in business was exploiting a VAT loophole to post CDs to customers from his Guernsey base on behalf of major retailers including Tesco, Asda, WHSmith, Dixons and Best Buy.
THG’s early VAT-free online sales operation has since grown into a digital health and beauty retail giant including Cult Beauty, Lookfantastic.com and the sports nutrition line Myprotein. It also provides e-commerce technology services to firms including Coca-Cola, Nestlé and Unilever.
THG and Warrington council did not respond to requests for comment.
