Kogan looking to raise $115 million to fund further acquisitions

Heather McIlvaine

11th Jun 2020

Online retail giant Kogan.com is looking to raise up to $115 million to fund further acquisitions following a strong start to Q4.

In a statement released to the ASX on Wednesday, the company said it was issuing new shares to raise $100 million from institutional investors.

Following completion of the placement, retail investors will be able to purchase up to $15 million of new shares in a share purchase plan.

In both cases, the offer is $11.45 a share, a 7.5 per cent discount to Kogan.com’s last close price on Tuesday, June 9, of $12.38.

The company said the proceeds will give it the financial flexibility to “act quickly on future value accretive opportunities”.

“While multiple opportunities are presenting themselves, the Company will focus on opportunities that are value accretive and broaden its offering, expand its customer base or enhance its operating model,” the retailer said in a statement.

Kogan.com recently purchased the IP and goodwill of popular furniture chain Matt Blatt for $4.4 million, and in 2016 it acquired Dick Smith’s online retail business out of receivership.

The company said it is well positioned take advantage of current market conditions given its ability to extract synergies through its leading proprietary systems, diversified supply chain and low cost of doing business.

Kogan.com last week revealed a 100 per cent year-on-year increase in gross sales in April and May, and 200 per cent increase in EBITDA, thanks to the influx of 260,000 new customers purchasing products from the online site during self-isolation.

The retailer’s share price topped $13 on Friday, giving the company a bigger market capitalisation than Myer and David Jones combined.

CEO Ruslan Kogan attributed this result to the company’s long-term strategy.

“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,” he said in a statement.

Kogan.com has not raised money since its listing and has paid out regular dividends, delivering a total shareholder return of 654.5 per cent between IPO in July 2016 in June 2020.