Ocado appeals to investors for £575m as UK economy slows

Online grocer Ocado has raised £575million from investors as the once fly-by-night group seeks to maintain expansion amid a slowing UK economy.

The company, which has been one of the biggest beneficiaries of the online shopping boom during the pandemic, said on Monday night it had sold 72 million shares to existing and new institutional investors at 795 pence each.

He raised an additional £3m placement by selling shares to management and in a separate offering designed for retail investors.

Ocado’s move comes as a combination of the sell-off in tech stocks, a slowdown in UK consumption and a return to pre-pandemic shopping habits combine to slow group growth.

Ocado Retail, an online grocery business it jointly owns with Marks and Spencer, warned last month that sales growth this year would be in the “mid-single digits”, down from earlier forecasts for 10%.

In a statement, Ocado said the proceeds from the sale of the shares will provide the company with “sufficient liquidity to fund the needs of its existing and expected medium-term customer commitments.”

The shares were sold at a discount of around 9% to Ocado’s closing share price on Monday. An investor favorite at the start of the pandemic, Ocado’s stock has fallen nearly 50% in the past six months.

Fitch, the credit rating agency, lowered its outlook on Ocado to negative on Monday, warning that it expected the UK-listed group’s international operations to take longer to turn a profit.

As well as an online delivery business in the UK, Ocado sells its warehouse technology and robotics to supermarkets. Ocado said the new funds would enable it to help customers, including Kroger in the United States and Coles in Australia, expand online grocery businesses.

The group “continues to make the most of ever-increasing demand by increasing its capacity, both reaching new geographies and expanding its ability to deliver customers in those areas,” he said.

Robert D. Coleman