Ocado, the online grocery business 40 per cent owned by the John Lewis Partnership, has raised its first bank debt, borrowing £20m from Lloyds TSB.
Jason Gissing, Ocado's finance director, hailed the deal as a significant breakthrough for the business, which has so far relied on a series of equity fund raisings to finance its business.
"It's been challenging at times to raise equity for an e-commerce business. We've got to the point where we are doing £130m of annualised sales from a standing start four and a half years ago. For the first time a bank has turned round and said 'we'll lend you some money'. That's what is so exciting about this transaction."
In January last year, the company raised £30m, bringing to nearly £200m the amount of money Ocado has raised to finance its fast-growing, albeit loss-making, business.
Its share register includes UBS, which has an 11 per cent stake, and Goldman Sachs, which owns 4 per cent.
Last year, the Rausing family emerged as a major shareholder. The family behind the Tetra-Pak packaging fortune now owns a 7 per cent stake and Jorn Rausing is a director of the company.
The £20m bank loan from Lloyds TSB will be used to finance further expansion, including new sales efforts in the North-west which includes the affluent areas of Manchester and Cheshire.
Mr Gissing said the company was close to covering its main fixed operating costs which mainly constitute its central warehouse in Hertfordshire.
He said it was conceivable that Ocado could grow over the next decade to a £2bn-£3bn turnover company.
"In some areas we are delivering to one in 20 households which is 5 per cent of the population. That could equate to a £6bn turnover business."Reuse content