A local council has lent £150m to The Hut Group’s billionaire founder following a raft of property transactions ahead of his company’s stock market flotation.
Warrington Council made available £151m of a £202m loan facility to an investment company called Icon 3 Holdco, which is indirectly controlled by THG chief executive Matthew Moulding, according to a council report from July.
The money helped with the construction of new properties for THG’s use and followed property transactions undertaken by companies controlled by Mr Moulding around the time THG launched its £5bn stock market listing last September, the Financial Times reported.
The loan, arranged by property firm CBRE, is secured against assets including various commercial properties, some that are currently being built, around Manchester airport. The terms of the agreement were not disclosed.
Many of THG’s freehold property assets have been transferred to companies controlled by Mr Moulding through Guernsey-domiciled Moulding Capital Ltd (MCL), a move that raised eyebrows at the time of the initial public offering. These companies now let the properties back to THG for annual rent of about £19m. THG and Mr Moulding defended the move at the time.
A large distribution warehouse in Warrington, known as Omega, was among those transferred to MCL before THG’s float.
The council defended the loan saying it was “not a new venture for Warrington and is a practice that has been evidenced as being well established for some time in local government across the UK”.
It added: “Our objective is to secure good quality jobs for local residents.”
Local councils funding – through loans – property development?
It’s bad enough when they do it on their own account, with equity. But investment banking by the guys hired to run the drains?