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Kogan To Float Today Major Concerns About Prospectus

Online retailer Kogan.com will float on the Australian share market today, with some investors – who bought the shares at $1.80 via Kogan’s initial public offering – looking to take an early profit if the shares rise significantly.

At $1.80, the company Ruslan Kogan founded 10 years ago as a private-label business flogging gadgets made his order by small Chinese operators, will have a market capitalisation of $168 million, according to the prospectus.

But the prospectus did not take account of Kogan’s latest venture, its $2 million acquisition of the Dick Smith online business, which has been trading under the Kogan umbrella since April.Spec Sheet

The company forecast a profit of $2.29 million on revenue of $201 million for the year to June 30 and is predicting profit of $36.7 million on revenue of $241 million for the current financial year.

This does not appear to account for takings from the Dick Smith online business which Kogan acquired in April. However the prospectus lists integration of the Dick Smith assets as one of two “growth initiatives” which it expects to bolster future results.

The other initiative is said to be growth in “new verticals, Kogan Travel and Kogan Mobile:, all of which were said to be their infancy at the time of listing.

Longer term initiatives are said to include the launch of additional “business verticals”; international expansion; and “selective and opportunistic” mergers and acquisitions.

In a CEO’s letter, Ruslan Kogan notes: “We often joke that ‘we’re a statistics business masquerading as a retailer’, but a lot of truth is said in jest. Analytics-driven decision making is at the core of our culture. Our entire team is obsessed with analysing data to improve the efficiency of our business and drive a better customer experience.”

Ruslan Kogan will retain a 50.5 percent stake in the company following today’s float, potentially worth more than $80 million. He will also earn an annual salary of $350,000 plus bonuses, and will receive $7.5 million cash from the proceeds of the float.

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