Ocado aims to raise £1bn for platform growth

Ocado is looking to raise £657 million in an equity share placing with institutional and retail investors, as well as borrowing £350 million through a convertible bond issue.

The money will be used to increase fulfilment capacity with its existing Ocado Solution partners and help acquire new grocery clients for the platform.

Chief executive Tim Steiner explained: “As we emerge from this crisis, Ocado has the opportunity to help our Ocado Solutions partners in the UK and around the world grow faster, to welcome more partners in new markets, to innovate more and more quickly, and to further strengthen our leadership position.

“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.”

Ocado Solutions existing partners include the likes of Morrisons, Kroger, Aeon and Coles. It is also set to switch from providing delivery services from Waitrose to Marks & Spencer later this year.

Last month, Ocado's reported retail revenues rising 40.4 per cent in the second quarter, as the Coronavirus crisis saw it deliver “significantly more groceries to households than ever before”.

The online grocer saw “unprecedented demand” for its deliveries during the last three months, causing revenue to nearly quadruple from first quarter trading.

To keep up with demand, Ocado said its customer fulfilment centres across the UK have been running at peak efficiency.

However, there were complaints about the decision to stop accepting new customers before the lockdown officially started on 23 March, leaving hundreds of existing customers - many of whom pay extra for free weekly deliveries with its Smart Pass - unable to access the platform.

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