Ocado taps investors for £575mn as UK economy slows

Online grocer Ocado has raised £575mn from investors as the once-high flying group seeks to sustain its expansion amid a slowing UK economy.

The company, which was one of the biggest beneficiaries of the boom in online shopping during the coronavirus pandemic, said late on Monday that it had sold 72mn shares to existing and new institutional investors at 795p each.

It raised an additional £3mn placing through selling shares to management and in a separate offering designed for retail investors.

The fundraising by Ocado comes as a combination of the sell-off in technology stocks, a consumer slowdown in the UK and a reversion to pre-pandemic shopping habits combine to slow growth at the group.

Ocado Retail, an online grocery venture it jointly owns with Marks and Spencer, warned last month that sales growth this year would be in the “mid-single digits”, down from a previous forecast of 10 per cent.

In a statement, Ocado said that the proceeds of the share sale would give it “enough liquidity to fund the requirements of its existing and expected customer commitments into the midterm”.

The shares were sold at a roughly 9 per cent discount to Ocado’s closing shares price on Monday. A favourite of investors during the early stages of the pandemic, Ocado’s stock has fallen almost 50 per cent over the past six months.

Fitch, the credit rating agency, downgraded its outlook on Ocado to negative on Monday, warning that it expected the UK-listed group’s international operations would 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 that the new funds would allow it to help customers, which include Kroger in the US and Australia’s Coles, to develop online grocery businesses.

The company said it “continues to make the most of the ever-growing demand by ramping up capacity, both by reaching new geographies and expanding their ability to deliver to customers within these areas”.