Tesco defends pledge of 20,000 new jobs as it pursues Eastern dreams with property fund float

THE head of Tesco’s British business defended the chain’s pledge of 20,000 new jobs yesterday, following analysts’ claims that supermarkets inflate their figures.

Richard Brasher said the hiring plan represented “real net new jobs” after the retailer, Britain’s largest, said it could not yet give figures for the split of full and part-time positions. More details are expected when its results are published in April.

On the same day, Tesco made a show of faith in the Asian markets, pricing the initial public offering of its property fund at the top of expectations. The British retailer will raise about 18.4bn Thai baht (£378.9m) in the continent’s second-largest IPO of the year.

In the UK, Tesco announced it would add 10,000 new and existing staff to its apprenticeship scheme, open new outlets and make a “significant investment” in customer service.

David Cameron said the recruitment drive is a “a massive confidence boost for the UK economy”.

Tesco launched the fightback after stunning the City in January with its first profit warning in 20 years. It will improve its offers of fresh produce, fresh meat, bakery and counter services and open an unspecified number of new stores.

Analysts at Nomura predicted the changes would cost £300m but Tesco described that as “speculative”.

Independent retail analyst Nick Bubb said: “The fact is that Tesco has let its stores lag its rivals and it is now playing catch-up.”

Meanwhile, the firm’s Thai IPO saw strong demand with 10,000 retail investors taking part. The deal, at 10.4 baht per unit, is the largest in Thailand for nearly six years and is equivalent to a yield of 6.5 per cent a year.

It will be closely watched in the West as investors look for signs of greater stability in the Far East, following last year’s floods and market turbulence. It will also be scrutinised by Tesco’s global rivals as retailers are trying to squeeze more value from their property assets by bundling supermarkets and shopping malls into a fund.

The Tesco Lotus fund is made up of 17 shopping malls anchored by a Tesco Lotus hypermarket in cities including Bangkok and tourist destinations such as Krabi and Koh Samui. Tesco has said it plans to use proceeds of the IPO to fund future expansion in Thailand.

The IPO, Thailand’s biggest since Rayong Refinery’s $710m offering in May 2006, received about $40m in commitments from Capital Research and Management, a unit of US fund manager The Capital Group Companies. The largest fundraising for Asia so far this year was the $794m listing in Shanghai by China Communications Construction last month.