Ocado set to name advisers for £1.2bn flotation of online grocer

Ocado, which now delivers food in Yorkshire sourced from supermarket operator Waitrose, is expected to appoint three investment banks, with Goldman Sachs and JP Morgan Cazenove seen as frontrunners to lead the float.

The company is set to raise about 160m from the flotation. Ocado declined to comment.

Last month Ocado reported a 30 per cent rise in underlying sales during December to 40.8m, with demand fuelled by a 30 per cent increase in the number of items it sells to 21,000, including its discount Everyday range. The Ocado flotation will be another test of investor demand for new stock offerings. Volatility in financial markets has lately dampened interest in IPOs, leading to several deals falling through in recent weeks.

Ocado may have to work hard to convince investors of its appeal given market uncertainties and the weak economic outlook. Such factors have already led to Pets at Home opting for a trade sale rather than an IPO.

Waitrose has seen strong sales growth in recent months and recently thanked arch rival Marks & Spencer for inadvertently plugging the Waitrose Essential budget range.

A high profile M&S advertising campaign, which compares prices at the two upmarket food stores, produced a massive uplift in sales of Waitrose’s Essential range.

Among the products featured in the comparison ads, sales of packs of 80 Essential teabags rose by 96 per cent year on year.

Waitrose recently said that its Yorkshire stores in Harrogate, Sheffield and Otley have performed particularly well.