Financial News: Fidelity Buys One Third Of Ocado

30th Jul 2010 08:50

By Elizabeth Pfeuti Of FINANCIAL NEWS One third of the shares sold in the flotation last week by U.K. online retailer Ocado Group PLC (OCDO.LN) were bought by two affiliates of asset manager Fidelity, according to regulatory filings, and half of the sale was taken up by existing investors. Ocado was forced to reduce the issue price of its initial public offering from a range of 200p to 275p to 180p after it failed to generate enough interest from institutional or retail investors amid concerns over its valuation. Since trading started last Wednesday, the shares have fallen 8.3%, closing at 165p on Thursday. Over the same period, the FTSE 250 Index of UK mid-caps has risen 4.0%. The first details of which investors bought shares in the IPO started to emerge this week with filings by shareholders who own more than 3% of the company to the Regulatory News Service, the official news service for U.K.-listed companies. These filings showed that Fidelity International Limited, a Bermuda-based asset manager, bought 28 million of the 205 million shares sold in the IPO. Fidelity Management & Research LLC, its US affiliate, bought 37.7 million shares, according to the filings. The two affiliates took up 32% of the shares available for sale. Fidelity first acquired a stake in Ocado in November 2009, according to the prospectus for the offering, at the same time as Generation Investment Management LLP , the asset manager run by former US Vice President Al Gore and ex-Goldman Sachs Asset Management chief executive David Blood. Generation also acquired around 29 million shares in the Ocado IPO, or 14% of the available shares on offer. Other pre-IPO investors that increased their stake in Ocado include Jorn Rausing, son of the founder of Tetra Laval International SA, the world's largest packaging company, who increased his stake by 1% to 10%, and private investor Nick Roditi, who used to work with hedge fund manager George Soros, added to his stake. In total, Fidelity, Generation, Rausing and Roditi, took up 50% of the GBP369 million share offering. Only one new investor has so far emerged as having taken a significant stake in Ocado. Nomad Investment Partnership LP, a Cayman Islands-listed entity linked to two former staff at Marathon Asset Management LLP, owns a 3.5% stake in the company, having bought 19.5 million shares in the offering, or nearly 10% of the sale. A spokesman for Ocado confirmed Nomad had not invested in the company before its IPO . Nomad was unavailable for comment. A source close to Ocado told Financial News that US fund management giant BlackRock Inc (BLK) had also taken a significant stake in the company when it listed but had not yet disclosed its holdings because they are held in a range of different funds. A source close to the company said Ocado was happy with its share register as Nomad and Fidelity had a track record of taking large initial stakes in online retailers. Fidelity bought around one quarter of the shares available when internet company Google went public in 2004, and at the end of last week, Nomad held 7% in UK online clothing retailer ASOS PLC (ASC.LN). It has also emerged today that hedge funds have not been short-selling the company in large volumes as Ocado suggested last week. Dataexplorers, a research company which tracks short selling, said 1% of the total Ocado free float was on loan last week. Tim Steiner, co-founder and chief executive of Ocado, said last week that he was not surprised to see some hedge funds "having a pop" at Ocado after its shares fell on the first day of trading. UBS ,which acted as bookrunner on the IPO, declined to comment . JP Morgan and Goldman Sachs, which also acted as a bookrunner, did not provide comment by deadline. Web site: www.efinancialnews.com (END) Dow Jones Newswires July 30, 2010 03:50 ET (07:50 GMT)