Wednesday 20th of April 2016
Koovs Plc... Is this the Indian ASOS?
By Aim Listing
It is irrational to see the share price of Koovs at the current level given that a significant fundraising priced at 25p per share is due to be approved before the end of the month. It would surely make sense for those participating in the placing to buy further shares in the market if the price remains low in the near term. This means there is scope for rapid capital growth for those buying in at the current level.
This month the company announced plans to raise approximately £4.5m through the issue of 17.8 million shares at 25p each. The new shares will be the equivalent of almost two thirds of the existing issued share capital and the price represents a premium of over 6% to the closing price of 23.5p per share on 8 January 2016.
Koovs is aiming to become a major player in online retail in India. It is very ambitious and estimates a funding requirement of around £30m over the next three years in addition to the funds which are currently being raised. The market has obviously taken a disliking to this fact and it is unusual for a placing to take place at a premium to the price in the market, so some caution must be taken as to why this may be the case.
The heavy involvement of Lord Waheed Alli, formerly Chairman of ASOS, should not be ignored. Looking at the success enjoyed by ASOS in recent years and the relative infancy of online retail in India the potential for upside is clear to see. A great deal of investment may be necessary though and those investing now could see their stakes being diluted significantly in the coming months and years.
There are no guarantees but those who are prepared to take a punt now should be well rewarded in a short space of time. Longer term prospects for the business are uncertain but for now there is a strong probability that the share price will climb in the days and weeks ahead.'Simon Flather at City Confidential' rates the shares as a TRADING BUY.
Further details about Koovs plc click here