OCADO, the online food retailer, has started a “beauty parade” of advisers for a stockmarket flotation after releasing a strong set of results which saw sales surge 25 per cent in a year.
Investment banks queuing up to help guide Ocado through a summer initial public offering (IPO) include UBS, Credit Suisse, Goldman Sachs, Nomura and JPMorgan Cazenove. Ocado has yet to select advisers for the listing, which is expected after the general election. But it will be confident on an IPO following yesterday’s year-end numbers.
Sales hit £402m, boosted by the addition of budget food ranges and a shopping application for the iPhone. The firm, which runs without any shops and distributes goods from an automated centre in Hatfield, said the average number of orders hitting customers’ doorsteps in a week rose 26 per cent to 71,000, crossing the 90,000 mark for the first time in November.
Although the company remained in the red, operating losses narrowed by a third to £14.4m. Ebitda, a measure of underlying profitability, rocketed 321 per cent to £9.2m.
Finance director Andrew Bracey told City A.M. the past year had been a more difficult time to do business than 2008. He said: “Trading conditions are pretty tough, but we seem to be trading well. It takes a while to get [to profitability] and we need to be patient. Thankfully, we have got patient investors.”
The John Lewis pension fund, which owns 28 per cent of the business, has said it will support an IPO. A flotation at a market value of £1bn – the price tag mooted by analysts – would net around £160m for the trio of former Goldman Sachs bankers who founded the business, including chief executive Tim Steiner.
In a sign of its determination to list, Ocado has beefed up its board. Former Reuters executive David Grigson and ex-KPMG vice president Ruth Anderson will join as non-executive directors, appointments one City analyst said would appeal to institutional investors.
Ethan Sinick, managing director of research group Kantar Retail, said: “There are some issues short-term, but if you look at the retail sector it is probably worth the £1bn valuation.”
Another analyst likened the growth story to Net-a-Porter or Asos.