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Summary
- Amazon could raise as much as US$148 million from its 5 percent stake sale in Deliveroo IPO.
- The US company will continue to hold around 11.5 percent stake after the listing.
- The retailer would sell around 23.3 million shares at US$6.3 (4.60 UK pounds) per share.
Amazon.com, Inc. (NYSE:AMZN) plans to sell shares worth up to US$148 million in Britain’s food delivery start-up Deliveroo Holdings Plc when it goes public in one of London’s major IPOs.
The e-commerce giant could raise as much as US$148 million from its 5 percent stake sale. It will, however, continue to hold around 11.5 percent stake after the listing, show the sale prospectus.
The retailer would sell around 23.3 million shares at US$6.3 (4.60 UK pounds) per share, analysts say. Meanwhile, the London-based Deliveroo plans to sell up to 1.77 billion pounds worth of shares. It has already started taking orders from investors from Monday, March 22.
Deliveroo hopes to raise one billion pounds from the IPO, while the rest of the proceeds will go to Amazon and other investors, which include Accel, Greenoak, DST, Bridgepoint, and Index Ventures. Deliveroo CEO Will Shu to sell 6.7 million shares, worth 30.8 million pounds at the top price range.
Mr. Shu will hold a 57.5-percent stake in the company, with 6.3 percent ownership of Class B shares, which account for 20 votes each. The Class A stock carries one vote each. However, his Class B stocks would become Class A shares after three years of the IPO, according to the firm. It has been done to ensure Mr. Shu gets the three years to execute the company’s long-term plans.
This voting control has been the subject of much debate in the UK, where it is currently not allowed. The dual-class structures, which are common in the US, allow founders to keep control of the company even after it goes public. However, the UK government has recently backed the idea.
Proponents of dual-class structures argue that embracing such a setup would help attract more fast-growing technology companies to LSE.
Deliveroo targets a valuation of around US$12 billion (8.8 billion pounds) after the London listing.
©Kalkine Group 2021.
Lockdown Boosts Deliveroo Orders
The company plans to invest the proceeds to further its growth following last year’s success. Its business soared during the lockdown as restaurants were shut and people order food from home.
Its US peers like San-Francisco-based DoorDash (NYSE:DASH) had also seen similar success. DoorDash’s value increased more than $60 billion after its IPO in New York in December last year.
Deliveroo’s orders surged 121 percent in the first two months of 2021 compared with the same period last year. Lauding the achievement, Mr. Shu, who is also a co-founder of the company, had said that it is only the beginning of an exciting journey for the company in the food delivery business.
However, this rapid growth from online customers could be difficult to sustain, post covid as the ease in restrictions would allow people to eat out instead of ordering food from home.
Food delivery services companies may find it difficult to maintain the same level of growth with the changing situation, they say. Rapid vaccinations have lessened covid fears from people’s minds, which would allow them to return to their normal lives. Many companies, which have had a rollercoaster ride during the lockdown, have forecast moderate growth in 2021.
