Kogan to ride e-commerce success with $115 million capital raise

At a time when e-commerce star Kogan.com (ASX: KGN) is seeing accelerated sales prompted by the COVID-19 pandemic, the company has announced it will conduct a $115 million capital raise.

The company says its $100 million placement and $15 million share purchase plan (SPP) will enable the retailer to take advantage of positive market conditions and provide improved financial flexibility.

Kogan's announcement comes just a few days after the company announced its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) was up 200 per cent in the fourth quarter to date, demonstrating the resilience of the company's online model during the COVID-19 pandemic.

Additionally, adjusted EBITDA in the financial year through to the end of May was up by more than 50 per cent.

"Kogan.com is well positioned to take advantage of current market conditions given the Company's ability to extract synergies through its leading proprietary systems, diversified supply chain and low cost of doing business," says Kogan.

"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 raise also comes in the wake of Kogan recently acquiring Australian furniture retailer Matt Blatt for $4.4 million which will be moved online.

"Kogan.com is committed to making the most in-demand products and services more affordable and accessible," says Kogan CEO Ruslan Kogan.

"Our long-term strategy has enabled us to thrive in the current challenging environment, and 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."

The $100 million fully underwritten placement will see 8.7 million new shares issued, representing 9.2 per cent of the company's existing issued capital.

The placement will be conducted at $11.45 per share, representing a 7.5 per cent discount to the last close price at Tuesday, 9 June of $12.38.

Canaccord Genuity (Australia) Limited and Royal Bank of Canada are acting as joint lead managers and underwriters to the placement.

After the placement is completed Kogan will conduct the offer of new shares under a non-underwritten SPP to existing shareholders.

The SPP will give eligible shareholders the opportunity to apply for up to $30,000 worth of new shares at the same issue price of the placement.

Updated at 10:27am AEST on 10 June 2020.