Koovs to go into administration, founder Waheed Alli steps in
The board of Indian fashion retailer Koovs has decided to place the business into administration after failing to secure additional funding to continue operations.
Koovs suspended trading in its shares on the AIM market on Tuesday morning following the announcement.
The company started seeking financing after a funding deal with Future Lifestyle Fashions Limited (FLFL), one of the top 10 fashion apparel companies in the world, ran into trouble earlier this year.
Future Lifestyle Fashions Limited had committed to invest £6.80 million in Koovs via a share subscription, however the Indian fashion company has yet to receive £6.5 million of that funding.
“Koovs is disappointed to announce that, as a result of the failure by its largest shareholder, Future Lifestyle Fashions Limited (part of Future Group, India's largest retail group), to fulfil a contractual commitment to invest a further £6.5 million into the company, and the failure by the company to secure alternative sources of funding, the board of Koovs plc has resolved to apply to place Koovs plc into administration,” it announced in a statement on Tuesday.
But this is not the end of the growing online fashion business, as its founder, Waheed Alli, is expected to acquire the business and assets out of administration.
And it seems he wants to take the company private, as Koovs said it has “no current intention” of appointing a new nominated adviser following Strand Hanson Limited’s resignation. All London AIM-listed companies must have an adviser at all times, and failure to appoint one within one month would lead to a cancellation of the company’s shares.
An administrator will be appointed in due course.
London-based Koovs is “the only online western fashion brand” in India. It posted encouraging results for the second quarter of the year, with a 100% increase in gross order value (GOV) to £5 million, growing website traffic and an uplift in trading margin.
But the Indian e-commerce market is still at an early stage, and the company’s scale is not large enough yet to have profitable manufacturing volumes. In the year to 31 March 2019, Koovs had a pre-tax loss of £15.5m.
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