Online retailer Kogan raises $100 million in an institutional placement

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Ruslan Kogan CEO of Australian online retailer Kogan.com | iTMunch

Australian online retailer Kogan successfully raised capital of $100 million via an institutional placement. The company announced yesterday that it will be raising capital to expand its services. It sold its shares for a 7.5% discounted price of $11.45 per share. The Australian e-tailer will also raise an additional $15 million by offering shares worth of $30,000 to each existing eligible investor at the same price.

While retail businesses have taken a hit because of COVID-19, a significant boom in e-commerce sale has been seen. More Australians are turning towards online shopping during the lockdown. According to Statista, e-commerce revenue in Australia for 2019 was $22.3 billion. For 2020, Statista predicts the revenue to be $25.8 billion. By the year 2022, it is predicted to grow to $29.9 billion and $32.3 billion by 2024 [1]. The forecast has been adjusted for the expected impact of coronavirus. Online retailer Kogan sales’ have boomed as a result of the lockdown. Here’s how the pandemic has affected the Kogan’s business.

The e-commerce boom and Kogan

Figures released by the company last week showed that its active customers increased to 2,074,000 on May 31st 2020. The company’s gross sales went up by 103.6% in the fourth quarter-to-date for April and May as compared to the same quarter in 2019. On May 31st, their cash was $58.6 million with the debt facility drawn to $26 million. CEO and Founder Ruslan Kogan said their long-term vision and strategy allowed the business to thrive during the COVID-19 period. 

In a statement to the ASX, the company said that the cash stockpile raised will be used for broadening the company’s offering, expanding its customer base or enhancing its model of operations. Kogan went into trading halt yesterday for the placement and since the capital raising, shares have soared.

Online retailer Kogan’s stock price soar 

Australian online retailer Kogan.com | iTMunch

Kogan is leveraging its escalating share price amidst the lockdown to raise capital. Just after 30 minutes of lifting the trading halt today, its shares jumped to $13.79. An 11% rise was seen since its Tuesday’s closing price of $12.38. After hitting a low of $3.79 mid-March this year, Kogan’s share price has more than doubled over the past three months. 

Mr Ruslan says that they are now in an even better position than ever to take advantage of opportunities around them. He adds that their ability to do low-cost business and digital expertise has put them in the driver’s seat to captivate market share as the retailer and e-tailer industries undergo a significant change.  

Greg Ridder, Kogan chairman, said there was strong support from the existing shareholders for the capital raising. He says that overwhelming interest from new investors was also received Since its listing in the ASX in July 2016, this is Kogan’s first capital raising. Between its IPO and now, the Australian online retailer has delivered its shareholders a return of 654.5%. Ridder recognises the trust placed by investors to deliver a significant return on capital and has confidence in their management team to do the same. 

Source

[1] Striapunina, K. (2020) “Australia: retail e-commerce revenue forecast from 2017 to 2024” Statista [Online] Available from: https://www.statista.com/forecasts/289742/e-commerce-revenue-forecast-in-australia  [Accessed June 2020]

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