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Ocado launches £500m bond issue to support tech plans

Ocado Group has today (2 December) announced the launch of a bond offering of approximately £500 million to fund its technology commitments.

A statement from the company said the guaranteed senior unsecured convertible bonds, due in 2025, will enable it to diversify its funding sources and “capitalise on attractive issuance conditions”.

Goldman Sachs and JP Morgan Cazenove are acting as joint bookrunners for the bond offering, which will be convertible into ordinary shares.

The initial conversion price is expected to be set at a premium of between 40% and 45% above the volume-weighted average price of Ocado’s opening share price this morning, and settlement is expected on or around 9 December. Final terms will be disclosed later today.

It comes at a time of significant growth for Ocado’s international business, with deals secured to support the online and fulfilment capabilities of large grocers in the US, Canada, France, Sweden, and Australia.

Ocado also announced last week that Japanese grocer Aeon has signed a deal to use the Ocado Smart Platform to support its retail services – it is the first Asian partnership for the UK-based tech business.

As Ocado continues its growth in the UK and prepares for a partnership selling Marks & Spencer (M&S) food and supporting the M&S online food operation from 2020, it also announced its first mini customer fulfilment centre will open, in Bristol, in approximately one year’s time.

The group offered an update on Ocado Retail trading, today, saying in the 13 weeks to 1 Dec 2019, retail revenue was expected to have grown by 10-11%. It added that growth in orders, including those for London-based rapid fulfilment service, Ocado Zoom, were “slightly higher” than retail revenue growth.