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Summary
- The food delivery company launched its London IPO on Monday, 8 March, after recording narrower losses during the pandemic year.
- The company was valued at over US $7 billion in its latest funding round.
- The company’s growth strategy comprised of building delivery-only kitchens, groceries, and restaurant tools to upgrade itself to the digital age, said Will Shu, the company CEO and founder.
Online food delivery firm Deliveroo confirmed that its initial public offering (IPO) will occur in London on Monday, 8 March. It also said that it had narrowed down its losses to £223.7 million for 2020 (2019: £317.3 million), as the stay-at-home orders rose due to the pandemic in 2020.
Alongside, the company had raised its gross transaction value or the number of transactions processed on its online platform by 64.3 per cent to £4.1 billion during 2020 (2019: £2.5 billion).
Will Shu, CEO and founder, Deliveroo, said that the company was ready to take the next big step and allow everyone to own a part of its business. With an aggressive growth strategy in place, the company was building more delivery-only kitchens, groceries, and restaurant tools to get to the digital age, he added. Shu also believed that the shift of moving towards takeaways and delivery services during the coronavirus pandemic was there to last.
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Also Read: Amazon-backed Deliveroo Valued At $7Bn, Looking At Potential IPO
The IPO value
The takeaway courier company’s IPO would be based on a US $180 million private funding round completed in January, Deliveroo was valued at more than US $7 billion. A company release over the weekend said that it would set aside £50 million worth of shares for its customers via a community offer.
Want to know more?: What Is Direct Listing? How Is It Different From IPO?
The release also said that it would use a dual class share structure, which would be applicable for three years, to provide more company control in the hands of the founders. Simply put, it implies that there will be a standard listing while entering the London Stock Exchange (LSE), instead of a premium one, which will exclude it from the FTSE indices, at least to begin with.
JP Morgan and Goldman Sachs were joint global coordinators for the Deliveroo IPO deal while the Jefferies, Bank of America, Numis, and Citi were listed as the bookrunners.
Also Read: Deliveroo to expand services into 100 new cites in the UK
The move comes days after Rishi Sunak, chancellor, UK treasury, announced that the government would alter rules to allow company founders to maintain control of their businesses despite selling shares on the stock exchange. Experts said that the move came to convince special purpose acquisition companies (SPACs) to list their shares on the LSE, in a bid to modernise the UK public markets.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said that faced with high competition from firms like Just Eat and Uber Eats, profit margins were likely to remain thin for Deliveroo. But if the company tried to strengthen its logistics capabilities and create a niche for itself, it had immense growth potential going forward, she added.
