Hey Kogan, where’s retail investors’ access to your IPO?

Pure online retailer Kogan to list on the ASX

online retail shopping

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Online retailer Kogan is planning to list on the ASX, but it’s unlikely that retail investors will be able to participate – even if they want to.

You see, like many companies, investment banks and brokers helping the company to list on the ASX will be doled out shares to sell to their favoured clients, while retail investors will almost certainly be ignored.

There is the new OnMarket Bookbuilds option, which is much more transparent and allows all investors access to an IPO (no matter who they have a brokerage account with).

And with the reported strong demand from investors – The Australian reports that the offer was four times oversubscribed – Kogan could have received more funds or a higher price for its shares, and likely paid less in fees if it had used the OnMarket BookBuilds option.

Kogan is reported to have offered $50 million worth of shares at $1.80 each to investors, valuing the company at $140 million enterprise value. That would also represent 20x forecast earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2017 financial year (FY17). Kogan forecasting EBITDA of $7 million in FY17.

Kogan has around $200 million of sales purely online, has 2.3 million active subscribers and sells 28,000 products. The company’s nearest competitors  are most likely Grays Ecommerce Group Ltd (ASX: GEG) and eBay, but Kogan also competes against the likes of JB Hi-Fi Limited (ASX: JBH), Harvey Norman Holdings Ltd (ASX: HVN) and the presumably soon-to-be-listed The Good Guys.

Grays offers online consumer auctions in key categories of wine, consumer electronics, IT, appliances, home furnishings and jewellery. The company also had a number of retail websites such as oo.com.au, dealsdirect.com.au and topbuy.com.ay – but these were sold to MySale Group plc late last year.

Foolish takeaway

Having revolutionised retailing in Australia, Kogan could have offered investors a revolutionary way to invest in the company, but alas it appears that is now unlikely.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »