LONDON: Ocado Group is planning to sell a debut bond to fund its UK retail capacity and improvements to its proprietary platform.
The UK online supermarket will meet investors over two-day meetings from Tuesday for a senior secured £200m seven-year non-call three-year deal. The announcement for the UK household name has already caught the market’s attention.
“We’ll definitely be looking at this one,” a high-yield trader said.
“It’s an interesting and well-known name and it will be firmly on our radar. I expect it will go down well.”
Ocado was established in the UK over 16 years ago when it entered its first branding and sourcing agreement with Waitrose. It listed on the LSE in July 2010. It is now expanding its presence into Europe, having announced its first non-UK partnership with a European regional retailer in early June.
Ocado also beefed up its regional presence when it signed a 25-year agreement with British supermarket Morrisons in May 2013 to provide technology, logistics and distribution services.
“The board believes that with its continued strong trading, increased scale and profitability, Ocado can benefit from the historically low financing costs in the public debt markets to put in place longer maturity financing on attractive terms,” the company said in a statement.
Ocado aims to extend its debt maturity profile and diversify its sources of funding but first will have to sell its credit story to bond investors.
“The stock market has already differentiated Ocado and said you’re not just a retailer, but also a tech company, and has priced them at a certain price,” a lead on the deal said.
— Reuters
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