Ocado forced to revise downwards issue price
Despite an apparent reluctance to give in to market conditions and investor demand for new issues, Internet grocer Ocado has this evening been forced to reduce its asking price to a range of £1.80 to £2.00 from an initial estimate of £2.00 to £2.75. This reduces the potential valuation for the business from around £1 billion to around £800 billion although it looks as though the offer will be successful at the reduced price.
Whether or not the company is or was worth in excess of £1 billion is open to debate but the fact is that investor sentiment for new issues has collapsed over the last few days. Indeed many people believed that Ocado would be forced to pull the issue at the last-minute but the company has managed to battle back with the assistance of US investors who have shown more appetite for the business. Whether this is a consequence of the reduced exchange rate between sterling and the dollar is a possible factor.
It will be interesting to see how the shares perform when trading begins on the London stock market and indeed whether they are able to maintain their flotation price.
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