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Ocado builds £1bn war chest as online demand rises

The online grocery group argues that recent shopping trends are here to stay
June 11, 2020

Ocado (OCDO) will raise £1bn in a bid to seize upon the recent surge in online grocery sales. The online grocer believes that its global target markets for its Ocado Solutions business could be worth around £2.8 trillion.

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Ocado observed last night that the shift towards more online food sales may require quicker growth in fulfilment capacity, necessitating a fundraising that it will use to invest in its own operations and support its Ocado Solutions outfit, with which it partners with leading grocers across the world. Its nine partners have combined annual global sales of £210bn.

Ocado retail sales were up 40 per cent in its second quarter to 6 May. It said that 90 per cent of surveyed US shoppers who bought groceries online in March will continue to do so, while an average of 47 per cent of existing European shoppers who have increased their online shopping during the coronavirus pandemic will continue this trend once it is concluded.

Ocado raised £657m via a share placing and retail offer, and will collect a further £350m via the issuance of convertible bonds, leaving the group with cash and cash equivalents of £2.2bn.