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Ocado IPO plans come into focus

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Interest in what now seems the imminent float of online grocer Ocado was stoked this weekend with a flurry of reports suggesting the IPO could be just weeks away.

The Observer reported that Ocado is set to use cash raised in the float to build a huge new distribution centre where as many as 2,200 people will work. Meanwhile, according to The Telegraph, a note from an unnamed analyst suggests Ocado will be a good bet for investment, since it’s likely to achieve a profit in the next two years.

So what do we know now about the much-rumoured, but as yet unofficial, Ocado float? The expected price tag is now generally put at £1bn for an ecommerce business that is feted for an efficient use of technology in its Hatfield distribution centre that many see as market-leading. According to The Telegraph, advisers are set to be brought in after Easter, while, says The Observer, the float is likely to take place between the general election and the summer. That suggests the date will be some time in late May to early June.

Concerns, however, have been raised that Ocado has yet to achieve a pre-tax profit, and depends heavily on a relationship with Waitrose that is set to be threatened with the launch of the supermarket’s own online delivery service. There may be some reassurance for doubters in the knowledge that Waitrose’s parent company John Lewis still holds a 30% stake in Ocado that it’ll be keen to see come good.

Our view: There’s bound to be keen interest in the Ocado float from across the business press – this is a rare transaction in what’s of late been a very quiet IPO market of late. But recent IPO interest from more than one retailer come to nothing of late – New Look for one ultimately decided not to. So we’ll be interested to see if and when concrete plans emerge. Certainly its founders, as former Goldman Sachs bankers, could be expected to have expert knowledge of getting an IPO right.

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