Fishburn Hedges

03.06.2010

So Ocado, the online food retailer, is to join the stockmarket via an IPO, one of the first companies and arguably the most high profile UK candidate to do so since the financial crisis.

We can expect the usual range of announcements from the company during the process; appointment of advisers, confirmation of intention to IPO, pricing range and – hopefully – a successful debut on the stockmarket.

But will the company and its media advisers realise that the world has changed since those heady pre-crash days when IPOs were all about P&Ls, return on capital and expected profits for all concerned?

The appointment of a large banking syndicate to manage the IPO may well mean that investment bank analysts are remarkably positive about the growth prospects for the company, but it is unlikely to address the growing concerns in the media and elsewhere about securing a fairer deal for other stakeholders.

In a recent and very revealing interview, Paul Polman, Chief Executive of Unilever and a man who, it is safe to assume, knows a goodly amount about balancing the needs of shareholders and customers, said: “I do not work for the shareholder; to be honest, I work for the consumer, the customer….”

Will Ocado’s board, made up as it is of more than a fair share of former Goldman Sachs bankers, think about this when deciding on the key messages for the IPO campaign, I wonder?

Will we hear less of the usual pre-IPO guff about a robust and differentiated business model driving the ability to produce superior returns and more about how the funds raised in the IPO will be invested in producing a better customer experience; less about dividend policy and more about building a business in which all stakeholders will benefit from sound long term strategies? I’m not sure.

But in a world where the consumer has become only too aware of the City, Ocado should choose its key messages – and its strategy – carefully. Should customers, suppliers and other stakeholders form a view that the IPO is good for the company but irrelevant – or even damaging – to them, then Ocado can expect that life post-IPO may become a little too interesting.

Management shouldn’t imagine that only shareholders will be reading those future announcements of record profits and higher margins. Stakeholders will want to know what the IPO means for them, why it’s the right decision for the company and why it’s better than a continuation of life as a private company.

One to watch…

Posted by Andy Berry