Ocado to raise £575 million for tech arm growth

Ocado is planning to raise £575 million ($704.2 million) through a placing of new shares to help fund the growth of its tech arm.

The online supermarket and technology group revealed its plans to fund company growth to the London Stock Exchange late on Monday afternoon, saying that the shift to online grocery shopping will continue.

The share placing will see new equity shares being issued to individual investors, corporate entities or small groups of investors and will increase the amount of shares in issue, diluting existing shareholders.

The placing will be conducted via an accelerated bookbuild, which will determine the price at which the shares will be placed.

Some directors and members of the senior management team – including group CEO Melanie Smith and CFO Niall McBride, intend to subscribe for new ordinary shares in the capital of the company.

The group has also agreed a new £300m revolving credit facility, which is being provided by a syndicate of international banks.

READ MORE: Ocado directors purchase cut-price shares

“The net proceeds of the capital raise is expected to give Ocado Group enough liquidity to fund the requirements of its existing and expected customer commitments into the mid-term, driving strong growth and returns in the future,” the company said.

The company said the roll-out of its Ocado Solutions technology platform has “materially accelerated” over the past year, winning it new partners and clients. It also stated that the “urgency to bring online grocery solutions to market” is at the “forefront of customers’ minds”.

“Ocado Group is continually improving build processes to reduce time to launch, using its tried and tested technology, allowing the company to ramp up capacity at accelerated rates,” it said.

“Revenue growth from Technology Solutions is secure and visible. The company has significantly progressed towards the target operating model, providing the conviction that the investments being currently made will produce attractive returns in the future.

Ocado also reinforced the full year guidance it issued earlier this year, stating that it expected to see a return to strong, mid-teens revenue growth in 2022.

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