News

Kenyan-born fashion mogul earns Sh3.2bn in UK firm share sale

kamani

Boohoo co-founders Mahmud Kamani (left) and Carol Kane. PHOTO | COURTESY

The Kenyan-born founder of Britain’s fast-rising online fashion company, Boohoo, has made Sh3.2 billion from selling part of his shares in the firm — affirming Nairobi’s standing as a robust business hub that produces world class entrepreneurs.

Mahmud Kamani, a joint CEO of Boohoo, concluded the transaction on Monday to take advantage of the company’s skyrocketing share price on the London Stock Exchange’s alternative investment market (AIM).

“Boohoo announces that, further to the announcement made on June 8, 2017 (successful fundraising of  £50 million and successful placing of 36,570,632 existing shares each at 220p per share), Mahmud Kamani, joint chief executive officer, has sold 11,252,502 ordinary shares at a price of 220p per share,” the firm said in a filing with London regulators, adding that “the transaction has now completed as the shares have been admitted to trading on AIM.”

The transaction came a week after Boohoo raised Sh6.5 billion by selling new shares to investors to fund its growth.

The total of nearly Sh10 billion raised in the twin share deals underline investors’ ardour, with the stock which has raised the firm’s market valuation to Sh369.5 billion as of yesterday.

That is the exact equivalent of the market’s valuation of Kenyan lenders KCB #ticker:KCB, Equity #ticker:EQTY, NIC #ticker:NIC and Co-op Bank #ticker:COOP combined or about 40 per cent of Safaricom’s #ticker:SCOM new record of Sh941.5 billion.

Against a net income of Sh3.2 billion in the year ended February, Boohoo is trading at a price-to-earnings ratio of 114 times, evoking memories of dotcom stocks’ frothy valuations in the 1990s.

Boohoo’s sales rose 51 per cent to £295 million (38.8 billion) in the review period and the firm is now hoping to hit a turnover of £3 billion (Sh395 billion) in seven years.

Mr Kamani’s company is now priced at four times as much as one of the UK’s largest high street clothing chain Debenham’s, reflecting investors’ view that online retailers will continue to grab market share from brick-and-mortar stores bogged down by relatively larger inventory and higher costs.

Amazon, the king of online shopping, is one of the most expensive stocks in the world with a market cap of $462 billion it has built by elbowing out traditional retailers like Walmart.

Mr Kamani, who was born in Kenya, and Carol Kane co-founded Boohoo in 2006. Mr Kamani was one of four children born to Abdullah Kamani, who left Africa in 1968 and moved his family to Manchester, UK.

READ: UK's top fashion retailer with Kenyan roots

The elder Kamani supported his family by selling handbags at a market stall before investing in property and starting a textile business using family ties in Asia and Africa to help with sourcing clothes.

Boohoo is one of the most recognisable online fashion businesses in the UK, with a presence in the United States, Europe and Australia. The company also owns the PrettyLittleThing and Nasty Gal brands that design, source, market and sell clothing, shoes, accessories and beauty products targeting 16-30 year-old consumers.

investor

An investor follows trading on the London Stock Exchange. FILE PHOTO | NMG

The company says on its website that it combines “cutting-edge design with an affordable price tag,” adding that its success is down to “pushing boundaries for the past eight years to bring you all the latest looks for less. Our philosophy is pretty simple: we don’t take fashion or life too seriously.”

Last week, Boohoo shares hit a record high – closing 18 per cent higher at £2.7 (Sh356) after the company said the money raised from the sale of new shares would be used to pay for a “supersite” warehouse, as the retailer attempts to meet rising demand for its clothing ranges.

Boohoo listed on the LSE in 2014 at an offer price of £0.5 (Sh65.8) and went on to trade below that level until May last year when it started its epic ascent, giving Mr Kamani a chance to more than quadruple his wealth.

The share sales left the Kamani family and Ms Kane with a 39 per cent stake in Boohoo, which targets young shoppers lured by celebrity endorsements on Instagram and other social media.

READ: Mother sues activist son Tony Gachoka for selling family home