Food delivery app Deliveroo hopes to raise roughly £1 billion of future growth funding as part of its initial public offering, the company said on Monday. The company, which is backed by online business giant Amazon, said that it will sell both new shares and stock held by existing investors.
The placing will be targeted at institutional investors although the IPO will also include a community offer, allowing users with UK Deliveroo accounts to apply for shares in the group, with priority going to more regular customers. Each customer will be able to apply for up to £1,000 worth of shares.
BIG DEMAND FOR PANDEMIC WINNER
The deal is expected to draw large interest from both institutions and app users and is expected to value the business at up to £7.5 billion. That would make it the largest London IPO by market cap since Royal Mail (RMG) in October 2013.
Confirmation of Deliveroo's IPO plans followed an announcement last week that it was expecting to list stock on the London market.
Deliveroo reported an underlying loss for 2020 of £223.7 million, narrower than the £317.3 million loss for 2019, as gross transaction value (the total amount of transactions processed on its platform) soared 64.3% to £4.1 billion thanks to a boom in home delivery during pandemic lockdowns.
TWIN-SHARE STRUCTURE
The company plans to adopt a dual-class share structure to give co-founder and chief executive CEO Will Shu greater control over the company early on and prevent the company being taken over too early. Shu will own all Class B stock that carry 20 votes per share all other investors getting Class A stock worth a single vote per share.
Deliveroo’s dual-share model will bar it from a premium listing on the London market, which means it won’t become part of the FTSE 100, the UK’s benchmark index, although this could change if London adopts recommendations of a report by former EU commissioner Lord Hill.
A date for Deliveroo’s IPO has still be to confirmed but the IPO will put Deliveroo on a stock market collision course with its main listed rival Just Eat Takeaway.com (JET), as the two firms continue to battle for the biggest slice of the UK’s takeaway delivery market.