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Deliveroo kicks off UK’s largest IPO in 2021

written by Bella Palmer
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The Food-delivery startup is selling shares at 3.90 pounds to 4.60 pounds apiece, valuing the company at 7.6 billion pounds to 8.8 billion pounds

Food-delivery startup Deliveroo Holdings Plc started taking investor orders in a share sale of as much as 1.77 billion pounds ($2.45 billion), marking the largest initial public offering (IPO) in the U.K. since September.

Deliveroo is selling shares at 3.90 pounds to 4.60 pounds apiece, according to a statement Monday, valuing the company at 7.6 billion pounds to 8.8 billion pounds.

The offering is the biggest float on the London Stock Exchange since THG Plc’s 1.88 billion-pound offering in September, according to data compiled by Bloomberg. The company will take investor orders through March 30, with the stock set to start trading a day after, according to terms seen by Bloomberg News.

The sale consists of as many as 384.6 million shares, and that amount could be increased by as much as 10% if there’s enough demand. Besides the 1 billion pounds of new shares the company aims to raise, existing shareholders will also offer stock in the IPO, Deliveroo said, without providing details. It plans to invest its proceeds to fuel growth.

Deliveroo had gathered enough investor demand to cover the full deal size throughout the price range within hours of opening the book, according to terms seen by Bloomberg News.

It is coming to the market at a time when coronavirus restrictions have caused surging demand for food delivery. Gross transaction value — the total value of purchases on its platform — rose 121% in January and February versus the same period last year, the company said Monday, after a 64% increase in 2020.

In its last full-year results, Deliveroo said that it had been profitable “at the operating level” for more than six months in 2020. Still, the company posted an underlying loss for the year of 223.7 million pounds.

Bringing the food category online represents an enormous market opportunity, it said, adding that less than one of 21 meals a week including breakfast lunch and dinner are ordered online now.

Deliveroo is listing with two classes of shares, which will give Chief Executive Officer Will Shu outsized voting rights for three years. The offering comes after a government-backed report this month made a slew of recommendations to reform U.K. listing rules, including allowing such governance structures on the premium segment of the LSE, but it could be months before these are implemented.

The proposals are part of London’s attempts to retain its clout as a major financial centre in a post-Brexit world and attract fast-growth technology companies to its stock exchange. Nearly 4.8 billion pounds has been raised in the U.K. through IPOs in the first three months of the year, according to data compiled by Bloomberg, in what might end up as the busiest-ever first quarter for listings in the City.

Even at the low end of the price range, Deliveroo would have the highest valuation upon admission of any company go public in London since Allied Irish Banks Plc listed in June 2017 with a market value of 12 billion euros ($14.3 billion).

Deliveroo’s shareholders include Amazon.com Inc., which holds a 16% stake, venture capital firms DST Global and Index Ventures, who own about 10% each, and U.S. mutual-fund company T. Rowe Price Group Inc. with an 8.1% interest.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are joint global coordinators on the offering, while Bank of America Corp., Citigroup Inc., Jefferies and Numis Securities Ltd. are joint bookrunners.

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