Deliveroo is poised to be London's largest Stock Market flotation of 2021
British-food delivery company Deliveroo, boosted by demand during the coronavirus pandemic, is set to hold an initial public offering in the coming months, in what would be the biggest new share issue in London for three years.[1]
The firm, which was founded in 2013 by Will Shu, has been preparing for what will be one of the London’s most prominent debuts of 2021. In preparation, Deliveroo has reportedly hired four investment banks to help with what could be the biggest flotation on the London Stock Exchange this year.
The firm is said to have appointed Bank of America Merrill Lynch, Citi, Jefferies and Numis to work on the listing. They will work underneath Goldman Sachs and JP Morgan on Deliveroo's IPO, which is expected to be launched in the first half of this year.[2]
On 17 January, it had raised a further $180 million from existing investors, including minority shareholder Amazon, in a move that values the business at more than $7 billion.[3] This investment reflects the strong demand for the firm’s services and the significant growth potential in the online food delivery sector in which consumer adoption is accelerating. Amazon has also invested in the firm’s growth potential, with Britain’s competition regulator approving Amazon’s May 2019 purchase of a 16% stake in Deliveroo in August, overruling objections from local competitors Just Eat Takeaway and Domino’s Pizza.[4]
Speaking in December, Shu said Covid-19 has accelerated consumer adoption of food delivery services by about two to three years, with order volumes in the UK and Ireland currently running at double 2019 levels. “We’ve demonstrated our model is profitable,” he said, adding that the previously loss-making company had been “profitable at the operating level for over six months now”.[5]
The continuing surge in revenues Deliveroo has seen since the start of the pandemic may increase its advisers' expectations of the valuation. Referring to publicly traded competitors in the US such as DoorDash, bankers are said to be preparing to pitch a valuation of potentially as much as £8bn, according to market sources.[6]
Deliveroo's upward momentum come amid a devastating period for many of its restaurant partners, with hospitality chiefs warning that hundreds of thousands of jobs will disappear from the sector without further state support.[7]
No date was set for the IPO, but Bloomberg News said it was expected in or around April.
Sources
[1] D. Millliken, ‘UK's Deliveroo raises $180 million from investors, valued at $7 billion’ Reuters (17 Jan 2020) < https://www.reuters.com/article/deliveroo-funding/uks-deliveroo-raises-180-mln-from-investors-valued-at-7-bln-idUSL1N2JR0AJ >
[2] S. Morrison, Deliveroo ‘hires four investment banks to help with major stock market flotation’ Evening Standard (13 January 2021) < https://www.standard.co.uk/business/deliveroo-four-investment-banks-flotation-london-stock-exchange-b882225.html >
[3] Milliken (n 1).
[4] P. Aripaka, P. Sandle, ‘UK clears Amazon’s investment in online food platform Deliveroo’ Reuters (4 August 2020) < https://www.reuters.com/article/us-deliveroo-m-a-amazon-britain-idUSKCN2501CW >
[5] Z. Wood, ‘Deliveroo secures $180m in funding as it prepares for IPO’ The Guardian (17 January 2021) < https://www.theguardian.com/business/2021/jan/17/deliveroo-secures-180m-in-funding-amazon-takeaway-as-it-prepares-for-ipo >
[6] M. Kleinman, ‘Deliveroo picks banks to serve up blockbuster float’ Sky News (13 January 2021) < https://news.sky.com/story/deliveroo-picks-banks-to-serve-up-blockbuster-float-12187105 >
[7] ibid.
