Kogan to raise $115 million as it hunts for new acquisitions
Online retailer Kogan has taken advantage of its record performance over the past six months and launched a $115 million equity raise, aiming to beef up its business through a range of new acquisitions.
The ASX-listed company announced on Wednesday morning it would undertake its first-ever raise, seeking $100 million from institutional investors in a fully underwritten share placement, priced at $11.45 per share.
Online retailer Kogan.com will undertake its first-ever capital raise, looking to net $115 million from investors.Credit:Louie Douvis
This is a 7.5 per cent discount to Kogan's $12.38 closing price on Tuesday and a 12 per cent discount to the company's all-time high of $13, which it reached last Friday after a massive 140 per cent share price rally since the ASX plunged on February 20.
A $15 million share placement plan will accompany the institutional part of the raise. Both raises are intended to increase Kogan's cash on hand and give it the option to "act quickly" on any future acquisitions, along with helping the company grow its customer base.
Kogan's most notable past acquisitions have been replica furniture retailer Matt Blatt, which it acquired for $4.4 million in May, and the digital assets of electronics retailer Dick Smith, which it snapped up for $2.6 million in 2016.
With numerous businesses struggling in the wake of the coronavirus pandemic, Kogan told shareholders there were "multiple opportunities" presenting themselves, but the business would focus on acquisitions which expanded Kogan's customer base or broadened its offering.
"Kogan.com is committed to making the most in-demand products and services more affordable and accessible," chief executive and founder Ruslan Kogan said.
"We are now in a better position than ever to take advantage of growth opportunities. Our low cost of doing business and digital expertise have put us in the driver’s seat to capture market share as the retail industry undergoes significant change."
Over April and May, Kogan's sales have soared over 100 per cent and earnings have similarly rocketed, up 219 per cent as more and more customers began to shop online during the pandemic.
Kogan's recent share rally and sales performance has boosted the market capitalisation of the retailer to $1.2 billion, making it now worth as much as the combined value of Myer and David Jones, two of Australia's oldest and most well-known retailers.
Shareholders have lauded the company's 6 per cent cost of doing business to sales ratio as one of its greatest strengths, with analysts claiming it is "one of the most efficient retailers in Australia".