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(Sharecast News) - Ocado said on Tuesday that it had raised around £575m in a share placing to fund its expansion.
Just over 72.3m new ordinary shares were placed at 795p per share, with existing and new institutional investors. The placing price represents a discount of around 9.4% to the closing share price on Monday.
The online supermarket also raised an additional £3m selling shares to management and in an offer to retail investors.
Announcing the placing late on Monday, Ocado said: "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 the online grocery market continues to show "significant" growth and that it needs to "bring solutions to market even faster".
"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. Over the past year the company has materially accelerated the roll-out of Ocado Solutions Platform (OSP) globally, increasing the number of partners, geographies, sites and types of solutions deployed.
"In markets where OSP is live, the solution has enabled partners to achieve leading customer satisfaction results, without sacrificing long-term profitability. This partner success underpins Ocado Group's confidence in the large visible growth opportunity."
At 0925 BST, the shares were down 5.2% at 832p.
Russ Mould, investment director at AJ Bell, said: "Despite the company still searching for sustainable profit, investors have been quick to back Ocado's latest cash call. A share placing at 795p is a near-10% discount to last night's closing price and 62% below the level at which the stock traded last September.
"Ocado remains a jam tomorrow story, with the company having greased its baking trays by means of winning numerous contracts with third party grocery sellers. The next stage is to fill these trays with the right ingredients to support their online grocery operations, and that's where all the extra money is needed alongside making improvements to its systems.
"While there remains excitement about the online grocery space, Ocado can't keep burning through cash indefinitely. At some point soon it will have to start generating profits and making money, as that's been the missing component with its story so far."
