Mike Ashley’s Frasers Group has become an investor in online retailer THG as part of a near-£100m fundraising to spin off the lossmaking technology arm Ingenuity.

Frasers, which owns Sports Direct, Evans Cycles, the House of Fraser department stores, the luxury streetwear chain Flannels and multiple brands from Slazenger to Jack Wills, has made a strategic investment of £10m in THG.

Matthew Moulding, the Manchester-based online retailer’s founder and chief executive, has also invested £10m as part of the fundraising.

The company, formerly known as The Hut Group, had aimed to raise £75m through an equity raise, share placing and subscription offer, but announced on Friday that it had overshot that target by 27%, raising £95.4m.

The funds will enable the company to split off Ingenuity, which makes the bulk of its revenues by providing “cutting-edge e-commerce solutions” to THG’s beauty and nutrition operations, providing it with medium-term funding to develop into a standalone company.

In June, THG announced a strategic partnership with Frasers Group, including a multiyear Ingenuity agreement, and the deployment of the group’s credit and loyalty platform Frasers Plus.

The company said the net proceeds above the £75m needed to demerge Ingenuity, which has 4,000 employees and 12 distribution centres globally, would be used for “general corporate purposes”.

After the demerger, THG will consist of the beauty and nutrition business that is behind the brands Myprotein and Cult Beauty. It also owns businesses including the brand Lookfantastic and the City AM newspaper.

Publicly listed THG, which has said the move will allow it to become a “simpler, cash-generative business capable of paying future dividends”, is valued at £642m.

Three years ago, THG struck a complex joint venture deal with the Japanese investment firm SoftBank that valued Ingenuity at a frothy £4.5bn. In 2022, SoftBank ended the agreement to invest and take a 20% stake, blaming “global macroeconomic conditions”, after only providing £610m of funds to help expand the business.

In its most recent results, THG reported a 3.6% year-on-year fall in total revenues to £934m for the six months to the end of June.

Sales at THG Nutrition declined 10.9% year on year to £395m, while THG beauty boosted revenues by 5.7% to £531m.

Moulding, who founded the company in 2004 and floated it in 2020 at a £5.4bn valuation, has previously said that he regretted listing the business.