Boohoo Group has announced that it has been preparing for a £35m equity fundraise, with the aim of creating additional liquidity to deliver the "optimal capital structure" for the group.

The fundraise by the fashion retailer is also set to reduce its net debt to adjusted earnings of less than two times in the 2027 financial year.

The move comes after shares in Boohoo jumped by over 45% in the last six months. However, its price dropped by 9% following today's announcement.

Alongside the planned fundraise, Boohoo's board is in advanced talks with its lending syndicate to provide the group with greater financial flexibility to deliver its turnaround and associated growth plan.

Boohoo stated that as a result of its business simplification, the planned fundraise and its focus on growing its asset-lite marketplace model, it remains confident in delivering its £50m earnings guidance for the current financial year, in line with previously upgraded expectations.

Head of markets at AJ Bell, Dan Coatsworth, said the move will look to improve Boohoo’s balance sheet.

He commented: "The share price has more than doubled in the past three months on positive signs of a turnaround in the retailer’s fortunes. The new shares will be issued at an 11% discount to last night’s closing price, which is enough of a sweetener to get investors to part with their cash without giving away too much.

"Getting debt under control is a gamechanger for attracting a wider pool of investors and convincing the market that the company has a solid future. The company is certainly making the right noises regarding its comeback, but success is not a given when you consider the highly competitive nature of fashion and beauty retail."

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