Kogan.com Raises Capital to Fund Acquisition Opportunities | KOSEC

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Kogan.com Raises Capital to Fund Acquisition Opportunities

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC - Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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Six months into the year and online retailer, Kogan.com has made a string of announcements that have emerged as a surprise to many. Back at the peak of the pandemic where companies hit rock bottom, Kogan.com announced in April that it experienced a surge in its sales, profit, and active customers. These positive results were likewise witnessed in its updates for the months of May and June. Subsequently, in the middle of May, Kogan.com made an unprecedented move where it announced its acquisition of Australia’s premier furniture retailer, Matt Blatt for $4.4 million.

More recently in June, the firm announced that its securities have been placed in a trading halt at as it intends to conduct a capital raising. Likewise, the decision to raise capital was one that shocked investment banks. This is because the past months have witnessed companies resorting to capital raisings to help strengthen balance sheet in a time of extreme uncertainty. However, the online retailer’s intention stood out from the pack.

Kogan.com has completed a $100 million fully underwritten placement and intends to use the funds raised to provide financial flexibility for itself to capitalise on acquisition opportunities when they arise. Due to the overwhelming response arising from local and international institutions, close to 9 million shares were issued at a discount price of A$11.45 per security - a 7.5 per cent discount relative to its last closing price. More notably, the placement is underwritten by Canaccord Genuity (Australia) and Royal Bank of Canada who both perform the role of lead managers.

However, this is not all that Kogan.com plans to do. The firm intends to conduct an offer of new shares through a share purchase plan (SPP) to existing shareholders. Specifically, existing shareholders are eligible to apply up to A$30,000 worth of new shares at the same price issued under the placement. Chief Executive, Ruslan Kogan and Chief Financial Officer, David Shafer are both substantial shareholders of the firm. Thus, while they will participate in the SPP, both executives will not take part in the placement. From a broader perspective, this will, in turn, witness their combined ownership to fall below the 30 per cent level.

In his view, Mr Kogan believes that the move was logical as Kogan.com had not raised capital since it was first listed in July 2016. Since then, the company has evolved to become a firm whose current market capitalisation of $1.17 billion, surpasses that of Myer’s. Additionally, more than 600 per cent of shareholder returns have been returned in the span of less than five years. Across the nation, the firm’s distribution centres are undeniably busier than they have ever been. This is in line with results recently released as Kogan.com welcomed the addition of 126,000 customers in May, bringing its total customer database to surpass that of two million.

By Caroline Wong 

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