Ocado is planning to raise £575 million ($704.2 million) through a placing of new shares to help fund its expansion, as the online grocery market “continues to show significant growth”.
The online supermarket and technology group revealed its plans to fund company growth to the London Stock Exchange late on Monday afternoon.
The share placing will see new equity shares being issued to individual investors, corporate entities or small groups of investors, increasing the amount of shares in issue and diluting existing shareholders.
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 company said the shift to online grocery “accelerated significantly” with the Covid-19 pandemic, with industry data suggesting this will continue as “customers continue to demand greater convenience” online.
Ocado said it intends to “make the most of the ever-growing demand by ramping up capacity”, moving into new locations and expanding its ability to deliver within these areas.
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”, adding that it is “continually improving” processes which allows the company to “ramp up capacity at accelerated rates”.
“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,” it added.
Ocado took the opportunity to reinforce 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.
The group has also agreed a new £300m revolving credit facility, which is being provided by a syndicate of international banks.