Lifestyle e-com venture Koovs raising $37M from London's AIM exchange

Lifestyle e-commerce venture Koovs is raising £22 million ($37 million or Rs 225 crore) by floating on London's junior stock market AIM, becoming the first non-travel e-commerce venture in the country to go public.

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.

Koovs Marketing Consulting Private Limited (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 Private Limited, a company controlled by the Nahata family in India, acquired a controlling interest in Koovs India, initially focusing on the sale of mobile phones and other electronic goods. It later pivoted to become e-tailer of fashion apparel and accessories.

In September 2012, Silvergate Retail Limited (now known as Koovs plc), which was founded by British businessman turned politician Waheed Alli and retail industry executive Robert Bready, who has previously worked at ASOS and Arcadia, got associated with Koovs India. In April last year, Alli and Bready joined Koovs as chairman and creative & retail director, respectively.

As per the plan, after its IPO, Koovs plc will subscribe to shares of Koovs India and will become its majority (57.5 per cent) owner. Under Indian foreign investment norms, foreign direct investment (FDI) in B2C e-commerce retailing is prohibited.

To comply with the rules, the organisation structure has been overhauled with Koovs India now operating exclusively as a wholesale trading entity supplying branded and private label fashion products to Indian firm Marble E-retail Private Limited. Marble E-retail, which is independently owned and managed, now operates the Koovs.com retail e-commerce website under licence from Koovs India.

This structure is similar to various Indian e-commerce ventures which have raised foreign funding without violating the regulations.

Although there are a few products e-commerce ventures which are part of other listed firms such as HomeShop18 (which is part of Network18), Rediff and 123greetings (IntraSoft Technologies), Koovs will become the first pure pay Indian e-commerce venture to go public.

Among others, online travel agency MakeMyTrip went public a few years ago in the US and Just Dial, which floated in Indian bourses last year, is embedding a transaction marketplace to its business search site.

After listing, Alli's holding in Koovs plc will shrink from 49.9 per cent to 19.6 per cent;  Exicom Tele-Systems (Singapore) Pte. Limited, a company connected with Anant Nahata, will see its holding come down from 38.4 per cent to 15 per cent and Bready's stake will shrink from 8.9 per cent to 3.5 per cent. Institutional investors BlackRock Fund Managers, Hargreave Hale, Henderson Global Investors, JO Hambro Capital Management and JPMorgan Asset Management (UK) will hold 7.1 per cent each while and Smith & Williamson Investment Management will own 5.9 per cent, with the remaining 20.5 per cent stake with other small shareholders.

The venture will have a market cap of £37 million ($62 million or Rs 377 crore) and given that its primary business and assets would be linked to its 57.5 per cent in Koovs India, the Indian firm will be indirectly valued at around $108 million or Rs 660 crore.

(Edited by Joby Puthuparampil Johnson)