U.K. online fashion retailer Boohoo is raising as much as £200 million ($243 million) with the anticipation of using it for acquisitions in the coming months as the pandemic unfolds, the Financial Times reported.
Manchester-based Boohoo has explicitly stated that the fundraising is for acquisitions, unlike rivals Asos, Joules and WHSmith, which have all done some forms of hoarding themselves.
Boohoo, which sells inexpensive, simply styled clothing to a consumer base of mostly young women, has proven to be a savvy acquirer of assets in trouble, and regularly spends around 10 percent of its profits on marketing. The company it is already reviewing some merger and acquisition deals.
Last year, Boohoo bought the brand and online business of upscale brands Karen Millen and Coast.
The placing will be done through an accelerated bookbuild, a practice sometimes criticized on the grounds that it puts smaller shareholders at a disadvantage. But the bookbuilding process doesn’t need the approval of shareholders and doesn’t put pre-emption rights on existing investors.
Zeus Capital and Jefferies will act as global coordinators and bookrunners for the placing. The placing is not underwritten, either.
The global pandemic has not been kind to retailers of any kind, including some “heritage” brands. The rights to the Laura Ashley name are now owned by Gordon Brothers, and Cath Kidston went through an insolvency process via its private equity owners. And shirtmaker TM Lewin, in a solvent sale, was bought by another private equity company just this week.
Boohoo has not divulged much about its own status during the pandemic, only to say that trading had improved in April year over year and looked like it was going to continue doing so through May.
Boohoo trades on London’s junior market. The company’s shares were down 2 percent Thursday (May 14), though they’ve been up 17 percent this year overall thus far. The company boasts a £4.1 billion market value.