Questions grow over Ocado's £1bn listing

ONLINE grocer Ocado kicked off its battle to win over a sceptical City yesterday amid claims from one retail analyst that it was worth less than half its £1 billion-plus flotation value.

The company's listing plans have raised eyebrows in the Square Mile as it has yet to turn a profit since launch more than ten years ago.

Ocado revealed that shares will be priced at between 200p and 275p a share, giving a mid-point valuation of 1.18bn when the company's plans to raise 200 million from new shares are included.

Ambrian analyst Philip Dorgan said a fair valuation would be less than 500m.

"It's losing a lot of money, but more importantly it's consumed a lot of cash and will consume even more over the next five years," he said.

Fellow retail analyst Jean Roche said Ocado's price plans suggested a "full valuation", at more than 40 to 50 times its next full-year underlying earnings.

Yesterday's pricing range would value the group at between 800m and 1.1bn without the new shares taken into account. Shares will be priced on 21 July, with dealings starting on 26 July.

The listing, which is expected to earn Ocado a place in the FTSE 250 index, is set to net paper fortunes for its founders - three former Goldman Sachs bankers Tim Steiner, Jason Gissing and Jonathan Faiman - and management, who between them own 13.3 per cent of the business.