Deliveroo to raise £1 billion in IPO after lockdown surge

Published Tue, Mar 16, 2021 · 05:50 AM


FOOD-DELIVERY company Deliveroo is seeking to raise £1 billion (S$1.87 billion) in a London stock market listing, buoyed by a rise in demand for its services during lockdowns.

Besides the £1 billion of new stock, existing investors plan to sell shares, Deliveroo said in a statement on Monday, without providing details. Deliveroo, whose backers include, was valued at more than US$7 billion in a January funding round.

Deliveroo will list with a dual-class share structure that will give founder and chief executive officer Will Shu voting control for three years. As such, the stock is confined to the London Stock Exchange's standard segment and can't be included in benchmark indexes such as the FTSE 100, despite its expected size.

The sale is part of a global surge in equity capital markets as the economy rebounds from the corona-virus pandemic thanks to ultra-low interest rates, government stimulus and the arrival of vaccines. The United Kingdom is headed for its biggest-ever first quarter for initial public offerings.

London-based Deliveroo's planned offering follows a government-backed report this month that made a slew of recommendations to reform UK listing rules. The proposals include allowing dual-class share structures on the premium segment of the LSE, but it could be months before these are implemented.


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After initially struggling at the start of lockdowns, Deliveroo got a boost as restaurants stopped providing service indoors, pushing more and more customers to order takeout meals and groceries.

The UK startup will be keen to replicate the success of US peer DoorDash, which surged 86 per cent in its December trading debut. Both companies face increasing competition from rivals such as Uber Technologies, with vaccine roll-outs also likely to lead to a drop in at-home dining in coming months.

Covid has accelerated the transition to online food ordering, but changed consumer behaviour will drive growth even after curbs are eased, Mr Shu said last week after the company announced its intention to float. Deliveroo's gross transaction value - the total amount of transactions processed on its platform - rose 64 per cent to £4.1 billion in 2020.

Lockdown gains aside, margins in the sector remain thin, prompting a wave of consolidation that saw US-based Grubhub agree in June to be taken over by Just Eat for US$7.3 billion, and Uber acquire Postmates for US$2.65 billion in July.

Goldman Sachs and JPMorgan Chase are joint global coordinators on the offering, while Bank of America, Citigroup, Jefferies and Numis Securities are joint bookrunners. BLOOMBERG


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