The wife of a broker involved in the floatation of the online fashion retailer Boohoo.com has a £22m stake in the business, it has emerged.
The 3.93% share in the £560m business pushes Clare Hughes’s stake above Aim’s 3% cut-off for “significant” shareholdings for people with a relationship to the director of a nominated adviser, or Nomad.
In this case, Hughes’s company, Zeus Capital, is the Nomad for the floatation. Her husband, Richard Hughes was also a director of the business until he resigned 3 weeks ago.
Under Aim rules shareholders with more than a 3% stake must ensure “adequate safeguards are in place to prevent any conflict of interest”.
According to the Financial Times, a Boohoo spokesman said that Hughes, along with the board, would retain her full stake for at least 18 months after the float, so there was no conflict.
The role of Boohoo director Petar Cvetkovic has also raised questions about transparency. He is also a non-executive director of Crawford Healthcare Holdings – a company owned by Richard Hughes.
He is also the chief executive of DX Group which was floated last month and also used Zeus as its Nomad. Should he be classed as an “associate” of Richard Hughes, then Aim rules forbid Zeus acting as a Nomad.
According to the FT, Boohoo said: “He is not viewed as an independent. He is an expert in logistics and has been on the board for six years. He is a shareholder.”
Meanwhile, the family behind Boohoo.com has pocketed £240m from the sale of their shares in the company, making them one of the richest in Britain.
How has Boohoo done so well so quickly?
Radcliffe Cole, Business Development Manager at Tryzens comments:
The valuation of shares in Boohoo.com at 50p will mean the online retailer will potentially be worth £500m on the London stock market, just a few years after its creation.
As an online-only store, Boohoo.com is unconstrained by politics and a bricks and mortar based retail mind-set. But another reason behind the retailers relatively quick success is its strong, loud and proud brand presence. From the exciting, bright colours on the online store, to the loud instantly recognisable music featured in their TV ads, the brand is hard to miss and even harder to forget. This brand identity has been developed specifically with their target audience in mind; young, teenage girls. It’s evident that Boohoo.com has clearly defined it’s audience and knows exactly how to cater to them. They are using the low cost, high impact nature of online retail to offer the latest trends at affordable prices. They saw a territory to own and as a result have a strong understanding of the market and customer demographics, allowing them to adapt products and price points in line with the changing trends.
What has made them popular with consumers is that Boohoo.com hasn’t focused solely on their retail offering as they have one of the most effective digital and traditional marketing approaches in the industry. They have successfully taken over the territory, leveraging social media to create brand ambassadors, such as celebrities that young, fashion conscious females connect with and look up to. These celebrity endorsements, along with a strong voice on social channels has produced a buzz amongst their customer groups. Boohoo.com has already provided a strong personality online and it will be interesting to see where the retailer places its focus following its flotation on the stock market.