Ocado to raise £1 billion to match demand from Covid-19 crisis
Ocado, the British online supermarket and technology group, plans to raise 1 billion pounds, giving it more firepower to capitalise on the rapid growth of the online grocery market triggered by the coronavirus crisis.
The group said on Wednesday it would raise about 657 million pounds through an equity placing and retail offer and about 350 million pounds through the issue of guaranteed senior unsecured convertible bonds due 2027.
“This capital raise gives Ocado Group the opportunity to accelerate our role in creating sustainable change in the industry, allowing us the flexibility to move at increased pace and capitalise on the full opportunity set over the medium term,” CEO and founder Tim Steiner said.
The group highlighted industry data showing online penetration had almost doubled in recent months to 13% of the UK grocery market, from 7% pre-COVID-19. Ocado said globally, online grocery penetration is currently low with significant scope for expansion.
Ocado said the step up in online growth was expected to generate a permanent and significant increase in online penetration.
The group’s shares have nearly doubled over the last three months, giving it a stock market capitalisation of 14.6 billion pounds – more than the combined market value of Sainsbury’s Britain’s second biggest supermarket group by sales, Morrisons, the fourth biggest, and Marks & Spencer.
The share price has mostly been driven by Ocado’s state-of-the-art robotic technology which has enabled it to win partnership deals with supermarket groups around the world, including Kroger in the United States, Casino in France and Aeon in Japan.
Last month, the group reported that Ocado Retail sales were up 40.4% in its second quarter to May 6.
It said on Wednesday current trading remained consistent with these trends.
Ocado shares closed 0.3% higher on Wednesday.