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UK's Ocado Group announces share placement to raise funds for investment

U.K. online grocer Ocado Group plc on Feb. 6 announced a share placement equivalent to 5% of its outstanding share capital in a move to raise money to fund investments.

The company, which does not operate any brick-and-mortar stores, said it intended to conduct a pre-emptive placing of 31,463,500 new ordinary shares to institutional investors through an accelerated bookbuild process run jointly by Goldman Sachs International and Numis Securities Ltd. The bookbuild process was due to begin immediately.

In late morning trading on the London Stock Exchange on Feb. 6, Ocado's shares traded down 30 pence, or 6.1%, at 462.50 pence. Based on the latest price, the offering could raise about £145 million before fees.—

Ocado said in a statement that the proceeds would be used to facilitate the signing of new partnerships globally for Ocado Solutions, which offers the company's proprietary end-to-end online grocery business model. It has signed up two international customers in the past three months — Groupe Casino, a French retailer, and Sobeys Inc., Canada's second-largest grocer after Loblaw Companies Ltd.

Hatfield, England-based Ocado estimates that capital expenditure in fiscal 2018 will be approximately £210 million.

In a separate announcement Feb. 6, Ocado reported that profit for the 53-week period ended Dec. 3, 2017, fell to £1 million from £12.1 million in the 52-week period ended Nov. 27, 2016. Revenue increased 12.4% to £1.35 billion from £1.17 billion.

"The last 12 months have been transformational for Ocado," CEO Tim Steiner said in a statement. "We have primed our Ocado Solutions business for growth and received an important validation of the business model through our latest partnerships with Groupe Casino and Sobeys. Looking ahead, we are confident that we will be able to do further deals with the momentum of new signings building over time."