Ocado Group PLC on Monday said it plans to raise £575 million to expedite growth plans amid surging online grocery demand in the wake of the Covid-19 pandemic.

In addition, it has agreed a £300 million new banking facility.

The online grocer and warehouse technology provider will raise the funds through a non-pre-emptive placing, with the price per share being determined at the end of a bookbuild process.

Ocado shares ended 0.1% higher at 831.68 pence each in London on Monday. It has a market capitalisation of £6.25 billion.

In addition to the placing, some company directors plan to subscribe for new shares. There will also be a retail offer through the PrimaryBid platform.

‘The net proceeds of the capital raise is expected to give the company 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,’ Ocado said.

Ocado said the shift to online grocery shopping has been accelerated by the Covid-19 pandemic. This trend will continue according to industry data, the company said.

‘The urgency to bring online grocery solutions to market is at the forefront of customers’ minds. Ocado Group is continually improving build processes to reduce time to launch, using its tried and tested technology, allowing the company to ramp up capacity at accelerated rates,’ Ocado added.

The company said it has accelerated the roll-out of its Ocado Solutions technology platform over the past year, winning new clients.

It added: ‘Revenue growth from Technology Solutions is secure and visible. The company has significantly progressed towards the target operating model, providing the conviction that the investments being currently made will produce attractive returns in the future.

‘The customer commitments the company already has, provide a clear path to potential group revenue of £6.3 billion and group earnings before interest, taxes, depreciation, and amortization of £750 million.’

It is not the first time Ocado has gone cap in hand to investors since the Covid crisis kicked off. In June 2020, it said it raised £1.01 billion from a placing, retail offer and bond offer.

Also on Monday, Ocado said it has agreed a £300 million revolving credit facility, provided by a syndicate of banks.

The company backed annual guidance issued in May, when it said it expects annual growth at the Ocado Retail joint-venture ‘in the low single digits’. The JV is operated alongside Marks & Spencer Group PLC.

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