Deliveroo will today make its long-awaited stock market debut on the London Stock Exchange, valuing the firm at £7.6bn.
The pricing, equivalent to 390p per share is at the bottom end of the firm’s pricing range after investors raised concerns over workers’ rights. The new pricing equates to a market cap of £1.2bn lower than its original valuation.
It is selling 345.6m shares, raising £1.35bn of which the majority will be used to expand its growth.
However the lower price comes after a string of fund managers said they would not take part in the deal because of concerns over Deliveroo’s profitability.
Additionally concerns over working conditions for its riders have been cited as one of the reasons investors gave Deliveroo the cold shoulder.
[U.S. gaming platform Roblox to delay release of IPO until 2021]
“It’s certainly a disappointing outcome for an IPO that initially generated a lot of enthusiasm, however 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,” Michael Hewson, CMC’s chief market analyst said.
But the City has largely welcomed the blockbuster float as it tries to attract fast-growing technology firms with Chancellor Rishi Sunak hailing it a “British success story”.
Founder Will Shu is set for a £26.2m payout for selling 6.7m shares, his remaining stake will be worth £449m. Due to the dual class share structure on the float Shu will receive outsized voting rights for three years.
“Today’s IPO is likely to be a decent indicator of how much investor enthusiasm there is for a company that has seen initial enthusiasm wane and where we appear to be starting to get far greater scrutiny of profitability, cash flow and growth prospects, as we start to look ahead to an economic reopening,” Hewson added.
Source: CityAM
