Kogan Raises $30M Not $50M As The Party Boy Claims ‘We Don’t Splash Cash”.
Party man, Ruslan Kogan the CEO of Kogan and his partner David Shafer, went out yesterday to raise $50M they got $30M from cornerstone investors, now the Company which is tipped to only make $400K this year is planning to float on July 4th, Independence Day in the USA.
Ruslan Kogan told Fairfax Media that he has no plans to “splash cash”
In a prospectus sent to prospective investors last week revenues are forecast to rise 19.9 per cent to $241 million in 2017 and gross margins to widen from 14.5 per cent to 15.2%.
Kogan also claimed in the prospectus “We subscribe to the philosophy that ‘revenue is vanity, profit is sanity’,” An official prospectus is expected later this week.
“We will strive to strike a balance between short-term profitability and investment in long-term vision and growth for the company he said in the initial prospectus, to put it simply, we don’t splash cash,” he said.
There is no mention of his recent Dick Smith acquisition or the fact that Amazon could launch in Australia or that he is facing increased competition from both JB Hi Fi and Harvey Norman.
There was also no mention of the flash cars or partying lifestyle that Ruslan Kogan has often been associated with.
He vowed back then to make 2014 a better year behind the wheel, reportedly becoming the first of 20 Aussies to own the new $320,000 BMW i8.
Interest in Kogan Online comes despite the spectacular $400M collapse of Dick Smith, who ended up selling their online business to Kogan who has also been accused of selling questionable products.
In the prospectus Kogan claims that house brands and his mobile and travel business will contribute to revenues going forward.
Kogan.com is planning to offer 28.4 million shares at $1.80 a share, raising $51 million. The e-tailer would have a market value of $168 million and an enterprise value of $140 million – representing a multiple of 20 times forecast 2017 EBITDA of $7 million.
The proceeds will be used to pay back $5.5 million in debt and fund growth, including investment in marketing and inventory.
One fund manager told Fairfax Media that the initial raising had been “well received,” they declined to be named.
“Online retail is not particularly flavour of the month at the moment but the view is he’s done an amazing job to get the business to where it is with no capital – that makes it stand out relative to some of the other online operators,” the fund manager said.
While the profit growth forecasts were ambitious they were still “relatively small, he said, and Mr Kogan had scaled back plans to sell a larger slice of the company at double the valuation.
Mr Kogan’s 70 per cent stake in the company will be reduced to 50.5 per cent by the issue of new shares and that of co-founder David Shafer from 30 per cent to 19.1 per cent.
Under voluntary escrow provisions, Kogan and Shafer will not be able to sell any shares until the release of the 2017 results, which is likely to be in August 2017, but could sell half their stock after August 2018.