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A UK local council provided one of its largest loans of more than £150m to the billionaire founder of THG Matt Moulding after he purchased a swath of the online retailer’s properties ahead of its stock market flotation.
A report prepared for Warrington council’s audit and finance committee in July showed it had advanced £151m of a £202m facility to an investment company called Icon 3 Holdco, which is indirectly controlled by Moulding.
Councils routinely lend money to boost their incomes but the scale of the Warrington facility is unusual — it is more than five times the size of any of the council’s other commercial loans.
It is considerably more than the £70m Trafford Borough Council lent directly to THG — formerly known as The Hut Group — at the start of 2020 to help finance the construction of the group’s Manchester headquarters. Both loans were arranged by CBRE, a real estate advisory firm.
The Warrington loan was used to facilitate the construction of new properties for THG’s use, and followed a series of property transactions undertaken by companies controlled by Moulding around the time THG launched its £5bn IPO in September 2020. It is secured against assets including various commercial properties around Manchester airport.
Many of THG’s freehold property assets have been transferred to companies controlled by Moulding through Guernsey-domiciled Moulding Capital Ltd (MCL). These companies now let the properties back to THG for annual rent of about £19m.
A large distribution facility in Warrington, known as Omega, was among those transferred to MCL before THG’s IPO.
MCL is developing a Silicon Valley-style campus at THG’s Manchester site to accommodate the company’s rapid expansion, financed both by debt and additional equity.
The 48-year-old Moulding is one of the UK’s most successful tech entrepreneurs, having begun his career selling CDs and DVDs online, and one of the most high-profile figures in the business and philanthropy circles of north-west England.
His direct stake in THG, in which he also owns a “special share” to ward off hostile takeovers, is worth around £650m but the Sunday Times Rich List estimates his family’s total wealth at more than £2bn. He has in the past donated to the Conservative party.
The Warrington loan was approved by the Labour-controlled council’s cabinet sitting in private session in October last year.
The council, which has been criticised by some for the scale of its external investment and lending activities, defended the loan. It said commercial lending of this type “is 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”.
“Our objective is to secure good-quality jobs for local residents,” it added.
The Ministry of Housing, Communities and Local Government said: “We have been clear that councils should not put taxpayers’ money at excessive risk in pursuit of commercial income.”
Warrington council remained within its overall “affordable borrowing limit”, according to the July report.
The terms of the loan were not disclosed, though at the time it was agreed local councils were still subject to EU state aid rules that prevented the provision of finance at below market rates.
THG and Moulding both declined to comment.
This story has been amended since publication to clarify that the loan was not used to refinance pre-IPO property transactions
