Koovs plc ("Koovs", the "Company" and, together with its subsidiary undertakings, the "Group") has announce that it has raised gross proceeds of £21.9 million through the issue of 87,600,000 New Ordinary Shares at a price of 25 pence per Ordinary Share.
This capital raising includes investments from both existing shareholders and new institutional investors including Ruffer LLP.
As previously detailed, proceeds of the Capital Raising will be used to fund the Company’s growth plan, starting in May with the next phase of its high-profile multi-channel marketing campaign, that will extend to five additional cities. This builds on the highly successful “Step into Koovs” campaign, which saw brand awareness increase from less than 1% to 8% and took web visits to over 1 million per week.The funds will also be used for working capital. In addition, some funds will be used to acquire the remaining 38.6% stake in Koovs Marketing Consulting Private Limited (“Koovs India”), as a result of which Koovs will own 100 per. cent. of its subsidiary.
Mary Turner, CEO of Koovs commented, “India’s online fashion market is expected to increase five-fold by 2020, to £1.5 billion, and we have a clear strategy to accelerate Koovs’ growth in this market. Today’s successful Capital Raising demonstrates the confidence of both new and existing investors in our strategy and provides us with further investment to scale the business. Our near term priority is to continue to build the brand, and we will be launching the next phase of our highly successful marketing campaign in five additional cities. Our ambition remains to become India's number one western fashion destination by 2020 and today’s announcement marks a next significant step towards that goal.”
Results of General Meeting
Following the announcement by the Company on 13 April 2016 in connection with the proposed Capital Raising, the Company is pleased to announce that all of the Resolutions proposed at the General Meeting held earlier today were duly passed.
Details of the Capital Raising
The Company today announces that it has raised gross proceeds of £21.9 million through the issue of 87,600,000 New Ordinary Shares at a price of 25 pence per Ordinary Share ("Issue Price") pursuant to the Capital Raising (“Initial Tranche”), (“Initial Tranche Shares”).
The Initial Tranche comprises investments by, among others, Lord Waheed Alli, Baroness Gail Rebuck and Ruffer LLP. The Initial Tranche Shares represent approximately 195 per cent. of the existing issued share capital of the Company.
The Initial Tranche is conditional upon Admission becoming effective and the placing agreement between the Company and Peel Hunt not being terminated in accordance with its terms. Application will be made for the Initial Tranche Shares to be admitted to trading on AIM ("Admission"). Admission and dealings in the Initial Tranche Shares is expected to take place at 8.00 a.m. on 3 May 2016.
Following Admission, the Company will have 132,483,691 Ordinary Shares in issue (there are currently no shares held in treasury) (“Enlarged Issued Share Capital”). The New Ordinary Shares will rank pari passu in all respects with the existing Ordinary Shares. The total number of voting rights in the Company will therefore be 132,483,691.
Acquisition of remaining stake in Koovs India to complete 100% ownership by Koovs plc.
As part of the Capital Raising, the Company has also taken the opportunity to acquire further shares in Koovs India, its Indian subsidiary, from Infotel E-Commerce Private Limited ("Infotel"), a company controlled by Anant Nahata. Accordingly, the Company has today entered into a share purchase agreement to acquire Infotel's entire 38.6 per. cent. holding in Koovs India for a total cash consideration of £9.0 million, thereby regularising the Group structure with Koovs India becoming a wholly owned subsidiary of the Company. The share purchase agreement is conditional upon, amongst other things, Admission. Completion is expected to take place shortly after Admission on 3 May 2016.
Potential further issue of shares under the Capital Raising
Pursuant to the passing of the Resolutions at today’s General Meeting, the Company has authority to raise up to £30 million in connection with the Capital Raising. In accordance with the terms of the Resolutions, following Admission, the Company is seeking to raise further funds up to a maximum of £8.1 million prior to 30 June 2016, potentially via multiple admissions to AIM. There is no certainty that agreements relating to any such further funds will be entered into and the Company will provide further information in due course.
Related party transaction – Capital Raising
Lord Waheed Alli, a director of the Company, and Silvergate Investments Limited (which is a company wholly owned by Lord Waheed Alli), together hold a total of 12,899,218 existing Ordinary Shares representing 28.7 per cent. of the existing issued share capital of the Company. Lord Waheed Alli has agreed, together with a connected person, to subscribe for 23,800,000 New Ordinary Shares in the Initial Tranche. Following completion of the Initial Tranche, Lord Waheed Alli and his connected persons will have an interest in 36,699,218 Ordinary Shares which will represent 27.7 per cent. of the Enlarged Issued Share Capital.
Baroness Gail Rebuck, a director of the Company, holds no existing Ordinary Shares. Baroness Gail Rebuck has agreed to acquire 800,000 New Ordinary Shares in the Initial Tranche. Following completion of the Initial Tranche, Baroness Gail Rebuck will have an interest in 800,000 Ordinary Shares which will represent 0.6 per cent. of the Enlarged Issued Share Capital.
Nextwave Ventures Pte. Ltd. (“Nextwave Ventures”) holds a total of 9,200,000 existing Ordinary Shares representing 20.5 per cent. of the existing share capital of the Company. Dragon Asia Holdings Pte Ltd (“Dragon Asia Holdings”), a company connected to Nextwave Ventures, has agreed to subscribe for 26,800,000 New Ordinary Shares in the Initial Tranche. Following completion of the Initial Tranche, Nextwave Ventures and Dragon Asia Holdings will together have an interest in 36,000,000 Ordinary Shares which will represent 27.2 per cent. of the Enlarged Issued Share Capital.
Michinoko Limited (“Michinoko”) holds a total of 7,621,855 existing Ordinary Shares representing 17.0 per cent. of the existing share capital of the Company. Michinoko has agreed to subscribe for 8,000,000 New Ordinary Shares in the Initial Tranche. Following completion of the Initial Tranche, Michinoko will have an interest in 15,621,855 Ordinary Shares which will represent 11.8 per cent. of the Enlarged Issued Share Capital.
Lord Waheed Alli, Baroness Gail Rebuck, Dragon Asia Holdings and Michinoko will in each case be treated as a “related party” for the purposes of Rule 13 of the AIM Rules in relation to the participation by them (or their associates) in the Initial Tranche.
The Directors (excluding Lord Waheed Alli and Baroness Gail Rebuck), having consulted with Peel Hunt in its capacity as the Company’s nominated adviser for the purposes of the AIM Rules, consider the terms on which Lord Waheed Alli, Baroness Gail Rebuck, Dragon Asia Holdings and Michinoko will subscribe for New Ordinary Shares in the Initial Tranche to be fair and reasonable insofar as Shareholders are concerned.
Related party transaction – Acquisition of shares in Koovs India
Anant Nahata, a director of the Company, controls Infotel. Anant Nahata will therefore be treated as a “related party” for the purposes of Rule 13 of the AIM Rules in relation to the acquisition by the Company of shares in Koovs India from Infotel (as described above).
Koovs India is the main operating company in the Group, supplying branded fashion garments and accessories for exclusive distribution through the Koovs.com website. As reported in the Group’s Annual Financial Statements, in the year ended 31 March 2015, Koovs India generated a loss before taxation of INR 632.5 million (£6.4 million).
The Directors (excluding Anant Nahata), having consulted with Peel Hunt in its capacity as the Company’s nominated adviser for the purposes of the AIM Rules, consider the terms on which the Company will acquire shares in Koovs India to be fair and reasonable insofar as Shareholders are concerned.
For the purposes of the Takeover Code, Anant Nahata, Exicom Tele-Systems (Singapore) Pte. Ltd., Nextwave Ventures and Dragon Asia Holdings are deemed to be a concert party shareholder in the Company (the “Concert Party”). Following the Initial Tranche, the Concert Party will have an interest in 39,622,283 Ordinary Shares which will represent 29.9 per cent. of the Enlarged Issued Share Capital.
Terms defined in the circular dated 13 April 2016 have the same meaning in this announcement, save where the context otherwise requires.
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