Deadline over for Ocado’s retail shares
OCADO last night closed the window of opportunity for retail investors to cancel their application to buy shares in the firm.
Analysts warned there could now be a backlash among small investors who do not
realise they are over-paying on the market price.
Customers and staff had been invited to buy stock as part of the online grocer’s IPO. However, when Ocado was forced to slash its valuation at the last minute owing to a lack of uptake from institutional investors, it was required to offer retail buyers a chance to cancel their purchase.
Anyone who had bought in at the 200-275p price range was given the option to buy shares at the lower valuation of 180p. However, Ocado has been left in a difficult situation as, after two days conditional trading, its stock has fallen almost 20p to 160.25p.
The retail part of the float – which Ocado was warned against by its banks – had already failed to attract anywhere near the interest the firm had hoped for, with reports suggesting it had netted just £5m to £10m. Ocado had hoped for £50m.
Ambrian analyst Nick Bubb said: “Whether there will be a reduction in the number of retail investors depends on whether people realise the shares have gone down.”
Bubb added: “If the investors are aware of that, it’s unlikely they will want to pay 180p a share unless they have a very long-term view. Ocado risks some negative feedback from those who haven’t withdrawn their application.”
Company sources said there was no update last night on how many customers had cancelled their purchases.
The flotation, which ended up at the lower end of the revised range, valued Ocado at £937m including £200m of new funds.