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Kogan announces $115 million capital raising to fund future acquisitions

Kogan share price
Source: Kogan presentation

The Ltd (ASX: KGN) share price has been a very strong performer in recent weeks but won’t be going anywhere on Wednesday.

This morning the ecommerce company requested a trading halt prior to the market open.

Why is the Kogan share price in a trading halt?

Kogan has taken advantage of the recent surge in its share price to raise capital via a placement and share purchase plan.

The company revealed that it is aiming to raise a total of $115 million. This comprises a $100 million fully underwritten placement at $11.45 per share and a non-underwritten share purchase plan to raise up to $15 million.

The placement price represents a 7.5% discount to its last close price.

Why is Kogan raising funds?

The company revealed that it intends to use the proceeds from the placement and share purchase plan to provide the financial flexibility to act quickly on future value accretive opportunities that broaden the company’s offering, expand its customer base, or enhance its operating model.

Last month Kogan announced that it had acquired replica furniture and homewares retailer Matt Blatt for $4.4 million. But judging by this capital raising, it doesn’t plan to stop there.

In fact, the company notes that multiple opportunities are presenting themselves. Though, it will focus only on opportunities that it believes add value.

Kogan’s CEO, Ruslan Kogan, commented: “ is committed to making the most in-demand products and services more affordable and accessible. 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.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended ltd. 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 Scott Phillips.

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