Ocado faces investor calls to abandon London listing for New York

Ocado has reportedly discussed with investors the possibility of moving its listing from London to New York in what would be yet another major blow to the capital’s beleaguered bourse.

The firm has held in-person talks with investors in recent weeks in which a potential move across the pond was discussed in detail, according to The Sunday Telegraph.

It is understood that at a private dinner last month, at least one top fund manager told Ocado’s management that it wanted the firm to properly explore the idea.

The news comes as shareholders have criticised some investors for not fully recognising Ocado as a technology firm, rather than principally an online grocer.

An exit by the FTSE 100 firm, with a current market capitalisation of £2.87bn, would come as a major hit to the already struggling London Stock Exchange.

Just six firms have joined the bourse so far this year, roughly keeping pace with last year’s performance – which saw only 23 companies list on the LSE. This figure was itself a 49 per cent slide from the 45 registered in 2022.

Meanwhile, a number of big names have either delisted or snubbed a London IPO in recent times, including travel giant Tui, gambling group Flutter and chipmaker Arm – the latter coming despite a major charm offensive from the government.

Arm, like many UK firms, eventually chose to list in New York, which offers attractive valuations and a deeper pool of capital, particularly for tech stocks.

Earlier this month, the CEO of Shell, the biggest FTSE 100 company, floated the possibility of the petrogiant abandoning its “undervalued” London listing in what would be an unprecedented setback for the LSE.

Ocado’s stock has cratered nearly 90 per cent from its peak of £28 and a roughly £22bn market cap in September 2020, as Covid-19 lockdowns boosted demand for online shopping, to less than £3.50 at the close on Friday.

Despite managing to turn around its retail arm last quarter following a series of price cuts, Ocado remains embroiled in a dispute over a final payment related to an online food joint venture with Marks & Spencer.

The pair signed a 50:50 deal nearly five years ago for Ocado to sell the supermarket’s food via its online store, with M&S paying an upfront sum of more than £560m. It is due to pay an additional £190.7m this August, based on certain performance targets being met.

M&S has claimed Ocado has not reached these performance targets, so it is withholding the final payment.  Ocado has warned of potential legal action if Marks does not hand it over.

City A.M. approached Ocado for comment.