UPDATE 2-Ocado seeking IPO valuation of over 1 bln stg

By Mark Potter

LONDON, July 6 (Reuters) - British online grocer Ocado is aiming for a valuation of over 1 billion pounds ($1.5 billion) in its planned initial public offering (IPO), despite turbulent markets and scepticism among some analysts and investors.

The firm, which announced plans last month to raise 200 million pounds in a stock market listing, said on Tuesday it would price its shares at between 200 pence and 275 pence.

That would give the business, which sells the products of upmarket grocery chain Waitrose, a market value of 1.18 billion pounds at the midpoint, including the fundraising.

Founded in 2000 by three former Goldman Sachs bankers, Ocado is enjoying soaring sales but has yet to make a pretax profit, sparking scepticism among some analysts and investors about whether its flotation will attract demand in jittery markets.

Britain's benchmark FTSE-100 index has fallen around 5 percent since Ocado announced its plans to float on June 24.

'We consider a fair market valuation to be no more than 500 million pounds,' said Ambrian analyst Philip Dorgan.

He has doubts over the economics of Ocado's model of selling groceries from a warehouse to people's homes, compared with rivals that use existing stores to fulfil orders locally.

British investors have driven a hard bargain in IPO markets this year, with companies like fashion chain New Look and airline ticketing firm Travelport abandoning their flotations, but others like retailer Supergroup and Jupiter succeeding, albeit sometimes at lower-than-planned valuations.

Ocado has said it will use money raised from the flotation to build a second depot for fulfilling customer orders.

It added that existing shareholders and optionholders would sell up to 155.2 million shares. These include the pension fund of the John Lewis Partnership, which is Waitrose's parent company and owns a stake of about 28 percent.



VALUATION

The midpoint of the indicative IPO price range would give Ocado an enterprise value -- equity plus debt -- of about 1.3 billion pounds.

That would be about 50 times Ocado's earnings before interest, tax, depreciation and amortisation (EBITDA) for this financial year, assuming the 181 percent increase reported in the first half is repeated over the full year.

By comparison, supermarket groups Tesco and J Sainsbury trade at 7.6 and 6 times EBITDA forecasts respectively, while fast-growing online fashion retailer ASOS trades at 19 times, according to Reuters data.

Following the fundraising, Ocado's founders -- Jonathan Faiman, Tim Steiner and Jason Gissing -- and management would together own about 15 percent of the firm, a spokesman said.

Ocado is being advised by Goldman Sachs, UBS, JP Morgan Cazenove and a junior syndicate of five other banks.

(Editing by James Davey and Hans Peters)

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