Deliveroo set for London stock market launch

by Ben PERRY / AFP

LONDON – Deliveroo lists Wednesday in London’s biggest stock market launch for a decade after the app-driven meals delivery group enjoyed surging sales during the coronavirus pandemic.

The eight-year-old British company, facing criticism over its treatment of self-employed riders, looks set to be valued at £7.6 billion ($10.42 billion, 8.90 billion euros).

Deliveroo earlier Wednesday confirmed the pricing of its initial public offering at £3.90 per share — the bottom of its target range.

Despite “very significant demand from institutions across the globe” amid market volatility, according to Deliveroo, its IPO has been snubbed by some asset management firms, citing the job insecurity and conditions of its riders.

It is raising about £1.5 billion from a sale of just over one-fifth of the group.

Trading in its shares begins at 0700 GMT. Institutional investors are the first to get a slice of the group, followed by the general public on April 7.

“I am very proud that Deliveroo is going public in London — our home,” founder and chief executive Will Shu said in a statement Wednesday. 

“In this next phase of our journey as a public company we will continue to invest in the innovations that help restaurants and grocers to grow their businesses, to bring customers more choice than ever before, and to provide riders with more work.”

Amazon-backed Deliveroo maintains that its riders — around 100,000 across 800 cities worldwide — value the flexibility the job affords.

However, its business model has come under scrutiny, including in Britain, France and Spain, over conditions.

The highly anticipated float has been overshadowed by small-scale protests, strikes and rallies in Australia, Britain and France, with more set to follow.

London boost

Deliveroo’s listing is seen as a major boost to London’s financial sector, known as the City, which earlier this year lost its European share trading crown to Amsterdam following Brexit.

The stock market float is set to be London’s largest since Swiss miner Glencore’s IPO in 2011 valued at almost £37 billion.

Deliveroo is selling around £1.0 billion worth of new shares, while current investors in the company are selling stock worth a combined £500 million.

Deliveroo has said that about £50 million of its stock will be made available for customers, with delivery riders and restaurant partners also able to participate.

The company is adopting a dual class share structure, giving founder Will Shu 20 votes per share while all other shareholders get one vote per share.

“Concerns over working conditions for its riders were also cited as one of the reasons for the reluctance to invest, however there are probably a number of others, including the dual class structure which restricts the voting rights of ordinary shareholders and gives CEO Will Shu, majority control over any significant board decisions,” noted Michael Hewson, chief market analyst at CMC Markets UK.

He added that “recent weakness in the share price of a number of its peers in the US, like Doordash, appears to have taken some of the shine off the sector”.

Britain’s antitrust regulator last year approved Amazon’s 16-percent investment in Deliveroo after an in-depth probe concluded it would not harm competition.

In 2020, more than six million people ordered food and drink every month via Deliveroo’s app from 115,000 cafes, restaurants and stores.

But it still ended up with a hefty loss owing to rising costs.

Pressure has meanwhile intensified on the wider “gig” economy to improve staff conditions after Uber earlier this month granted its UK drivers worker status, with benefits including a minimum wage.

A world first for the US ride-hailing giant, Uber moved after Britain’s Supreme Court ruled that its drivers were entitled to worker’s rights.