ONLINE grocer Ocado dismissed more calls to cut the price of its planned flotation yesterday, saying analysts had misunderstood the fundamentals of the business.
Several analysts claimed yesterday the Waitrose grocery distributor is worth much less than its intended £1bn valuation, and urged the firm to lower its sights.
Shore Capital analyst Clive Black said he would give Ocado a maximum value of £534m while Nick Bubb from Arden Partners suggested the firm compromises by cutting the price range from 200-275p to around 170p per share.
“That would mean issuing more new shares to get the required £200m of new money and would involve some painful dilution to existing shareholders,” said Bubb.
“We don’t know if that is feasible, but the current stand-off has to be broken somehow.”
A spokesperson last night remained confident the float would go ahead as planned. “Given that we are in a blackout period, we are unable to go into details beyond saying that this research is based on a substantial misunderstanding of the fundamentals of the business, in particular the nature of Ocado’s mutually beneficial arrangements with Waitrose and Ocado’s relationships with its direct suppliers,” she said.
“We remain convinced of the attractiveness of Ocado as an investment.”
The firm has not made a pre-tax profit since it was founded by three former Goldman Sachs bankers in 2002.
FAST FACTS | OCADO
The firm has a 10-year deal with Waitrose to deliver online grocery orders in parts of the UK.
It has annual revenues of around £400m, and the John Lewis pension fund owns a 10 per cent stake in the company.