British online supermarket Ocado has plans to raise over 1 billion pounds (1.12 billion euros) in capital. The company wants to further expand its online grocery delivery business.
Earlier this week, Ocado announced it plans to raise 734 million euros in new shares and 390 million euros in convertible bonds. This should give the online supermarket “flexibility to move quickly and capitalize on the full opportunity set over the medium term.”
Online grocery market is booming
While deciding to pursue the capital raise, the company considered multiple factors. One of them is that the online grocery market is showing a significant acceleration. Data from Nielsen shows that in the United Kingdom, online penetration has almost doubled in recent months to 13 percent of the UK grocery market.
Online penetration went from 7 to 13% of the UK grocery market.
Reasons for the capital raise
Ocado has named four reasons for the capital raise. One of the reasons is that the money will enable them to support its current Ocado Solutions partners. “Because the surge in online grocery demand globally may require faster growth in fulfilment capacity”, the British supermarket explains.
Other reasons for the extra capital is that they can then fund new Ocado Solutions partners, continue investment in innovation and at a faster pace, and further expand its position as leading end-to-end solution provider for online grocery fulfilment.
Ocado wants to support current partners and fun new ones.
Ocado currently has 9 partners, including Morrisons, Kroger, ICA Gruppen and Groupe Casino.