Lifestyle e-tailer Koovs' London listed parent mulls to up stake

VCCircle_Koovs-1Koovs plc, the parent of Indian lifestyle e-commerce venture Koovs.com, is planning to increase its holding in Indian arm Koovs Marketing Pvt Ltd (Koovs India), which operates as a wholesale supplier to Koovs.com, it has disclosed.

The retail shopping venture is run by another firm, Marble E-retail Pvt Ltd, under licence from Koovs India, to confirm to the ban on foreign investment in online retail trading business.

Presently, Koovs plc owns 57.5 per cent of Koovs India and it intends to up its holding to around 90 per cent. This would be through issue of fresh shares.

Separately, Koovs plc is in talks with existing and other investors to raise £35 million (around $53 million, or close to Rs 350 crore) for stepping up its marketing spends to better compete with peers.

It could not be ascertained whether bulk of this money it is looking to raise would be utilised for subscribing to fresh shares of Koovs India.

An email query to Koovs' spokesperson seeking clarity did not also elicit any response immediately.

Koovs, which runs on an inventory-based e-commerce model, competes with the likes of Flipkart-owned Myntra and Rocket Internet's Jabong besides several other horizontal and vertical e-commerce players in the booming market for online retailing of fashion apparel and accessories.

The company incurred a huge loss last year and needs to raise capital to sustain its business as it may exhaust its cash by the quarter ending June 30, 2016. Koovs India, whose financials pretty much mirror that of the London-listed parent, clocked revenues of Rs 20.4 crore with a net loss of Rs 92 crore for the year ended March 31, 2015.

The UK-based parent expects to secure funding by December 2015.

It had recently got a commitment of around £1.1 million from top management executives and key shareholder British businessman-turned- politician Waheed Alli.

Koovs India was established in May 2010 by Rajesh Kamra, Manish Tewari, Kanishk Shukla and Amit Shukla as a general e-commerce business. In August 2011, Infotel E-Commerce Pvt Ltd, a company controlled by the Nahata family, acquired a controlling interest in Koovs India, initially focusing on the sale of mobile phones and other electronic goods. It later pivoted to become an e-tailer of fashion apparel and accessories. It now offers a mix of private label and branded merchandise.

Koovs plc was earlier known as Silvergate Retail Ltd. It was founded by Waheed Alli and retail industry executive Robert Bready, who has previously worked at ASOS and Arcadia. Silvergate got associated with Koovs India in September 2012. In April 2013, Alli and Bready joined Koovs plc as chairman and creative and retail director, respectively.

Koovs plc raised £22 million ($37 million then) by floating on London's AIM stock market last year. AIM is a sub-market of the London Stock Exchange, which allows smaller companies to float shares with a more flexible regulatory system than is applicable to the main market.

After listing, Alli's holding in Koovs plc has shrunk from 49.9 per cent to 20.2 per cent. Exicom Tele-Systems (Singapore) Pte Ltd, a company connected with Nahatas, now holds 15 per cent and Bready holds 3.5 per cent.

Institutional investors Henderson Global Investors and JO Hambro Capital Management are other key shareholders.

Koovs plc's share price has slid since it listed in March 2014 with a market cap of £44 million ($74 million). It is currently valued at just £9 million ($13.6 million).