The Co-operative Food could invest a chunk of finance into acquiring a smaller operator after its owners secured just under £1bn this week.

The Co-operative Group, which operates the Co-op supermarkets, has agreed a £950m refinancing deal with a group of banks led by Barclays.

Analysts believe some of the monies could be spent on making further acquisitions after it acquired 28-store Scottish grocery chain David Sands earlier this year.

Barclays, HSBC, Royal Bank of Scotland, Lloyds and Handelsbanken each provided The Co-operative Group with £150m. The Co-operative Bank and Bank of Ireland gave a further £125m and £75m respectively. The group said the senior debt facilities have the capacity to be increased to £1bn.

The refinancing has given The Co-operative Group, which also includes its funerals and financial services businesses, funds to “develop the trading operations” of its organisation.

The majority of the £950m will be earmarked for the group’s legal services division but investment will also be made in the retailer’s store estate.

Planet Retail analyst David Gray said: “In recent years we have seen The Co-op gobble up smaller property operators and there’s definitely potential for more, the deal puts them in good shape for that.

“The David Sands acquisition gave The Co-op more reach in Scotland but they still have room for growth there. They are also expanding in the south and east.”

Shore Capital analyst Clive Black said: “There will be bolt-ons it will acquire over time and it will also need to invest in stores and organic growth and fully digest the Somerfield business.

“Problems in its estate around parking, leases and access make it difficult to compete compared to other retailers.”

The Co-operative’s new chief executive for food Steve Murrells, who joined last month, will be looking to improve the retailer’s performance.

It recorded a 2.1% fall in like-for-like sales in the year to December 31 as operating profits fell from £389m to £309m. The retailer, which has 2,883 food stores, has seen its market share fell to 6.6% in the 12 weeks to July 8, down from 7% the year before.