The founders of Revolution Beauty have rejoined the firm, announcing a proposed equity placing of over 345 million new ordinary shares and a subscription of over 154 million shares to raise approximately £15m.

Priced at three pence per ordinary share, the placing and subscription shares represent a premium of 156.5% on the existing issued ordinary share capital, while the issue price represents a 14.16% discount on its closing mid-market price of 3.5 pence per existing ordinary share on 21 August.

Revolution Beauty said the proposals were part of a new strategy launched by its founders, Tom Allsworth and Adam Minto, who have rejoined as CEO and consultant, respectively, with the view of returning it to long-term profitability.

The gross proceeds of the raise will be used to reduce debt, provide working capital, pay fees and provide a basis for the business to return to growth.

Revolution Beauty has also proposed a separate £1.5m retail offer, offering up to 50 million new ordinary shares, which will be available to existing UK-based shareholders via the BookBuild platform. This raise is expected to be used to provide further liquidity headroom.

Alongside the placing and subscription update, Revolution Beauty said it was currently in discussion with Debenhams, which owns 29% of the firm, around a "more formal commercial agreement regarding future collaboration".

This comes after Frasers Group announced in June that it would not make a formal offer for the firm.

Since its initial public offering in 2021, the beauty brand’s share price has fallen by over 97%. However, following the placing announcement, shares in Revolution Beauty increased by over 18%.

Despite the initial share price increase, investment analyst at AJ Bell, Dan Coatsworth, said it was "not easy to put a positive gloss" on Revolution Beauty’s latest update.

He concluded: "The fact the company is no longer up for sale because it couldn’t get a successful offer means shareholders no longer have the prospect of an immediate exit and must now hope this last-ditch effort can revive its fortunes.

"Debenhams is supporting Revolution Beauty’s latest turnaround effort, which comes just a matter of days after the latter downgraded earnings guidance after having to make changes to accounts to get the auditor to sign them off – not a great look.

"Trying to find positives in the situation is like putting lipstick on a pig but the shares are up slightly today on the fundraise news and the return of co-founder Tom Allsworth as CEO. The injection of capital should give it some breathing space with lenders as it looks to execute a strategy based on product development and a more credible pricing strategy, efficiencies and optimised market spend.

"However, these initiatives will need to work quickly if Revolution Beauty is truly to become a viable business for the long term."

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