Ocado launches US$642 mil bond issue to fund robotic warehouse deals

LONDON: British online grocer and technology company Ocado has launched a 500 mil pounds (US$642 mil) bond issue, partly to fund its construction of robotic warehouses for overseas partners, it said on Monday (Dec 2).

While Ocado’s retail business has only a 1.4% share of Britain’s grocery market, its state-of-the-art technology has enabled it to win partnership deals with supermarket groups around the world, including Kroger in the United States, Casino in France and most recently AEON in Japan.

Those deals have powered the group’s 9.3 billion pound stock market valuation, up 68% this year.

Ocado said the guaranteed senior unsecured convertible bonds, due 2025, are expected to carry a coupon of between 0.75% and 1.25% per annum.

The group also said that Ocado Retail’s revenue growth was expected to be 10-11% in the 13 weeks to Dec 1, its fiscal fourth quarter, with growth in orders including those for Ocado Zoom, its ultra-fast delivery service, slightly higher than retail revenue growth. Third quarter revenue growth was 11.4%.

In February, Ocado and Marks & Spencer agreed a 1.5-billion-pound joint venture, signalling the end of Ocado’s long-running supply contract with upmarket supermarket chain Waitrose in September 2020.

Goldman Sachs International and JP Morgan Cazenove are acting as joint bookrunners for the bond offering. –Reuters

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