Kogan float opens flat as negative market sentiment weighs

It’s been a rocky start for Kogan.com, as shares slid more than 15pc after a humble debut.

Ruslan Kogan will share a $15m windfall from the sharemarket float of Kogan.com with his business partner David Shafer. (Pic: Hollie Adams)

Shares in internet retail business Kogan.com have dropped sharply in its first afternoon of trade, as investors are weighed down by concerns over Brexit, the economy and prospects of a hung parliament following last week’s Federal election.

Kogan.com shares initially opened flat against their $1.80 offer price at noon, in a humble debut for the business. But they slid later in the session, falling as much as 17 per cent in brisk trade, before closing 16.7 lower at $1.50.

The listing price had given the online retailer a market capitalisation of $168 million, which fell to less than $140m by the end of trade.

Under the initial public offer 28 million new shares in the online retailer were issued at an offer price of $1.80 per share to raise $50m.

It was also a good day for the company’s founder, entrepreneur Ruslan Kogan who along with his business partner David Shafer will share a $15m windfall from the sharemarket float of Kogan.com.

At the current trading price, Mr Kogan’s 47 million shares are worth $84.6m and Mr Shafer’s 17.8 million shares are worth $32m.

Kogan.com will direct part of the raised funds from the IPO towards paying down $4m in debt the company has accrued over recent years with the bulk of the fresh injection of capital to go towards its aggressive retail growth aspirations.

The retailer has recently broken into new sectors, launching Kogan Travel and Kogan Mobile while it is also integrating the Dick Smith online assets which were acquired in April 2016. The company also plans to expand Kogan.com’s higher-margin product ranges, which include its private label and its domestic third party branded products

Approximately 28,000 products across private label and branded product offerings are sold on the Kogan.com platform.

Mr Kogan has sold down his 70 per cent stake in Kogan.com to about 50.46 per cent, and Mr Shafer has emerged with 19.07 per cent of the company.

The prospectus released for the IPO shows Kogan.com posted a loss of $300,000 in 2015, down from a profit of $1.8m in 2014. The company forecast profit to return to $400,000 in 2016, growing to $2.5m in 2017.

Revenue is set to climb to $270.1m in 2017, up from $214m in 2016 and $216.3m in 2015.

Kogan.com had a gross margin of 14.4 per cent in 2015, tipped to rise to 14.5 per cent this year and 15.2 per cent in 2017.

It has approximately $30 min of net cash on the balance sheet.