News & Analysis

Kogan launches IPO to fund further growth and expansion

- June 9, 2016 2 MIN READ

After much speculation, online electronics retailer Kogan has today announced its Initial Public Offering, with new shares to be released at an offer price of $1.80 per share as it looks to raise $50 million. The funds will be used for growth capital, with investment in new products, categories and marketing.

Ruslan Kogan, founder and CEO, and David Schafer, COO and CFO, will retain approximately 69.2 percent of Kogan.com, entering into voluntary escrow agreements.

The offer, meanwhile, is comprised of an institutional offer, open to institutional investors, a broker firm offer, open to Australian investors who receive a firm allocation from their broker, a priority offer, open to investors nominated by Kogan.com, and an employee offer open to eligible employees.

Greg Ridder, newly appointed non-executive chairman of Kogan.com, said that as the company embarks upon its next growth phase, it is well-placed to consolidate its leadership position in the market, expand into new categories, and “explore vertical opportunities where the Kogan brand can deliver strong consumer recognition and loyalty.”

The listing, expected at the end of the month, will help the company pursue growth in new verticals, in particular Kogan Travel and Kogan Mobile, integration of the online assets of Dick Smith acquired earlier this year, expansion of Kogan.com’s higher-margin product ranges, and expansion of the Kogan community.

Kogan said the company wants to ensure that everyone who investors in Kogan.com believes in its mission and “learns about what makes us tick.”

“By focusing on our customers and funding our growth from cash flow, we have been EBITDA positive since inception. Kogan.com has enjoyed strong growth for the past ten years and, up until this point, has never had any external equity funding,” he said.

The company’s forecast sales revenue for the next financial year sits at $241.2 million, with a forecast EBITDA of $6.9 million. Kogan.com reports it had 52 million site vists per year in 2015, with 621,300 unique customers.

Kogan said, “I am incredibly proud of Kogan.com’s track record and I believe this sets us apart from our peers. It also speaks volumes about our culture, which is underscored by high levels of personal responsibility, and demonstrates the strength and sustainability of our business.”

This focus on culture and responsibility – and in turn the decision not to offer shares to the general public –  is an interesting one, with the issue of tech companies listing on the ASX a hot topic of discussion over the last few weeks as music streaming company Guvera announced it would be looking to raise up to $100 million at a valuation of more than $1 billion through an IPO.

Of course, responsibility was also an issue with new Kogan property Dick Smith, which previous owner Anchorage Capital, a private equity firm, listed on the ASX for $520 million in what has been called “the greatest public equity heist of all time”. The company went into receivership last December with debts of $390 million before its online assets were acquired by Kogan in April.

Image: Ruslan Kogan. Source: Supplied.