• Paul Kelson

Warehousing giant Segro raises £680m to cash in on Covid ecommerce boom

Warehousing landlord Segro today revealed it had snared an extra £30m from investors as aims to cash in on the boom in ecommerce accelerated by the Covid crisis.

The company last night launched a placing at 820p, aided by Bank of America and UBS, to raise £650 million. Today it said it had raised £680 million in the raise, backed by institutional and retail investors.

The company, which counts Amazon, Tesco and Ocado as customers, aims to spend £1 billion developing warehouses by 2021. It bought the 34-acre Perivale Park site in west London for £202.5 million on Monday.

Segro’s chief executive David Sleath said the funds would be used on more developments in the UK, land buying, and to acquire existing sites in Britain and across Europe. He said: “This is about giving us capital for more growth.”

Sleath said: “Demand for warehouses has been on a positive trend for some time and I think demand has heightened during the pandemic. I think the pandemic has heightened everybody’s awareness for the need for best in class supply chains.”

Analysts at Peel Hunt cautioned that, although Segro will benefit from the long-term growth of ecommerce, Covid-19 could impact its business at Heathrow and Park Royal short-term. The shares dropped off 11.6p to 847.2p

In a note advising clients to reduce their holding, the analysts said: "With the shares trading on a 26% premium there is little room for disappointment. Although we think the longer-term prospects of the business are enhanced by an acceleration in e-commerce, we have concerns over the near-term prospects for the Heathrow and Park Royal portfolios that service Heathrow Airport and the London F&B sector respectively. With cargo volumes through Heathrow down 60% in April and most restaurants acrossLondon closed over the past three months, we expect occupiers linked to these two industries to be experiencing very low levels of trade."

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