Online grocery delivery service Ocado (LON:OCDO) has raised in excess of £1 billion to fund the expansion of its services as demand for food delivery booms during the coronavirus lockdown.
“Online grocery is experiencing an inflection point. The current crisis is proving a catalyst for permanent and significant acceleration in channel shift globally which we believe will redraw the landscape for the grocery industry worldwide,” said Tim Steiner, CEO and Founder of Ocado.
The £1,007 million capital raise was made through an institutional placing, retail offer and convertible bond offering.
The placing and retail offer was made at 1,960p representing a discount of 5.7% to the closing share price of 2,079p 10th June 2020.
The majority of the £657 million raised from the issue of new shares was made by institutions. PrimaryBid facilitated the retail offer which amounted to 362,000 new ordinary shares.
The convertible loan offer of £350 million had a 35% conversion premium to £19.60 and provides a 0.75% coupon.
The Ocado capital raise will be used to grow capacity and expand their partner programme in the face of surging demand. Ocado estimates their target market is worth £2.8 trillion globally.
“Ocado’s model is proven, providing a flexible platform with the best customer offer and economics, and we are already the partner of choice for nine of the world’s largest grocery retailers. The significant acceleration in online grocery provides us with greater opportunities than ever before,” Tim Steiner said.
“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 shares fell 6% to 1,950p on the results of the placing but are up 52% in 2020 and are the FTSE 100’s top performing stock this year.