Monday 2 December 2019 9:14 am

Ocado offers £500m in bonds after Aeon warehouse deal

Online grocer Ocado today announced a £500m bond issue as it seeks cash to fund tech arm Ocado Solutions’ commitments.

The company said that the guaranteed senior unsecured convertible bonds, due 2025, are expected to carry a coupon of between 0.75 per cent and 1.25 per cent a year.

Read more: Ocado shares soar on Japanese robot warehouse deal

Shares in the online supermarket fell nearly seven per cent this morning on the back of the news.

The offering comes after a sequence of deals with international supermarket groups such as the USA’s Kroger and France’s Kroger.

On Friday Ocado announced the latest of these, a partnership with Japanese retailer Aeon to help it launch a new online business.

Ocado uses robot technology in its customer fulfilment centres (CFCs) to automate many processes.

It said it would supply Aeon with CFCs and end-to-end software applications to serve millions of customers across Japan.

Aeon did not say how much it was paying Ocado, but said the agreement included an upfront fee, in addition to later payments, which will depend on performance.

The company said it expected an additional £25m of operating costs in fiscal year 2020 to implement the service.

David Madden, market analyst at CMC Markets, said the move would boost both revenue and the company’s reputation around the world, which would help with future deals.

The retail disrupter currently has a stock market valuation of £9.3bn, up 68 per cent this year.

Read more: Ocado to build sixth warehouse as online grocer accelerates growth

On Ocado Retail, the group also announced that it expected revenue growth of 10-11 per cent, with growth in orders including those for Ocado Zoom slightly higher than retail revenue growth.

The latest data from market research firm Kantar, for the 12 weeks to 3 November, showed that Ocado was the fastest growing supermarket with sales up 13.5 per cent, outpacing all of the Big Four grocers and the German discounters.