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July 21, 2010

Update: UK: Bullish Ocado CEO looks to future after IPO

Ocado CEO Tim Steiner insisted today (21 July) that investors are buying into the much-criticised online retailer's future, not its past, as the UK group made its debut on the London stock exchange.

Ocado CEO Tim Steiner insisted today (21 July) that investors are buying into the much-criticised online retailer’s future, not its past, as the UK group made its debut on the London stock exchange.

Steiner cited the “shift” in the music industry that has made Apple the largest music retailer in the world after entering the sector only a decade ago and said: “[The critics] are missing that, in ten years from now, we will be living in the future, not in the past.”

Speaking to reporters, Steiner said he was not disappointed at having to reduce the offer price of Ocado’s shares to 180p as it meant that he could entice greater investment from a number of blue-chip shareholders, who “share our vision for the future”, some of which purchased over 3% of the company.

Steiner also said he was unconcerned by the initial fall in Ocado’s share price, which had dropped 9.9% to 162.25p at 12:00 BST this afternoon.

The Ocado boss insisted “shares can be quite volatile in the short term” and added that the price of the stock would be “much higher” in two years.

Steiner, who now holds just under 5.4% of the business, added he would not consider selling any of his shares even at the high end of the initial offer of 275p.

Throughout the conference call, Steiner was bullish about Ocado’s future. He said he was “proud” and “excited” that the proceeds from the IPO will now allow the company “to go from being a GBP550m company to a GBP2bn one and beyond”.

Ocado has faced criticism in recent weeks from sections of the City that felt the company’s management had overvalued a business that is yet to make a profit in a decade of operation.

Steiner attacked analysts who worked for banks not employed by Ocado for the IPO that he claimed had breached a “blackout” period they should have hononoured.

Steiner described a “number of reports from very small securities houses who were very happy to get their name into print” and that all were “missing some things about Ocado”.

He also countered claims that Ocado focused its efforts on bringing in foreign shareholders to get beyond the criticism the IPO has received in the UK.

Steiner said the company never changed its roadshow plans and spent time in each of Paris, Frankfurt, Amsterdam and the US.

Nonetheless, Steiner added that he did get a good reception in the US as there are “more companies like us” there.

However, some 40% of shareholders who have invested in Ocado are from the UK , while 30% are from the US. The remaining 30% of investors are in Europe.

The largest single investor is Tetra Pak billionaire Jon Rausing, who now holds an 11.1% stake in Ocado.

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