City hesitates over Ocado price

Investors have balked at the likely list price of Ocado, which is looking to raise £400m in a stock market flotation.

Leading institutions said that the float was likely to fail if Ocado's founders, a group of former Goldman Sachs bankers who are set to scoop as much as £150m from any flotation, are not prepared to lower the price.

"One billion quid for a company that has never made any money? We've seen this before," said one fund manager. "We won't be touching it and my peers at other fund management groups feel the same." Another manager said: "It's simply too expensive. There has to be a reality check or else there is a real chance it could fail, although press reports tell me otherwise."

Fund managers said they are also deterred from backing a listing because Michael Grade, the former BBC and ITV chairman, is Ocado's chairman.

Meanwhile, it's believed that John Lewis which owns Waitrose, for whom Ocado delivers groceries, is waiting to do a deal should a listing fall down.