Activist investor group Kelso Group Holdings has urged ecommerce giant THG to consider a demerger of its three business divisions “to maximise shareholder value”.

In a letter to THG’s board of directors, Kelso said it believes “strongly that the three distinct businesses within THG are worth considerably more as separate businesses than the current market capitalisation of THG”.

The group added that it sees a demerger of its three business divisions –Beauty, Nutrition and tech platform Ingenuity – as “the most compelling route to resolving the inherent disparity between THG’s share price and its fundamental fair value”. 

Kelso chief executive John Goold said: “We believe that the market would respond well to a formal confirmation of a demerger of THG. Whilst there is a multitude of reasons why the valuation of many smaller companies remains at very low levels, companies need to ensure that they have clear strategies in place to maximise shareholder value and avoid unwanted predatory interest at the wrong levels.  

“We hope that THG adopts our beliefs and announces a strategy for the demerger of its three standout global businesses without further delay”. 

The letter comes after THG chief executive Matt Moulding snapped up a 3.2% stake in Kelso Group last week, becoming the business’ third-largest shareholder. 

THG was worth £5bn when it floated on the London Stock Exchange in 2020 but since then its share value has taken a hit with the group now being worth £1bn.