Deliveroo’s $1.39 billion IPO could value it upwards of $7 billion

On Monday, in a statement Deliveroo said, it plans to sell around new shares worth $1.39 billion (1 billion pounds) in its upcoming initial public offering (IPO), in what is expected to be the biggest London listing in more than seven years.

The British food delivery company, which has the backing of Amazon.com Inc, said its listing will also include the sale of shares by some existing shareholders, potentially pushing the deal size even higher.

The IPO is expected to value the company upwards of $7 billion, based on a private funding round which it competed earlier this year in January.

Confirming that it will have two classes of shares, Deliveroo said, its founder and CEO Will Shu will be the sole holder of “class B” shares giving him 20 voting rights for the 20 shares held by him as opposed to the other shares which carry one vote.

According to a source, this arrangement is to last for three years; the structure is designed to protect Deliveroo from a hostile takeover, said the source.

While a dual-class share structures are a common feature among listed tech companies in the United States they are however frowned upon by British investors since they provide executives outsized influence on shareholder votes relative to their stake sizes.

Currently, London-listed companies cannot have a dual-class structure and gain access to the lucrative FTSE indices at the same time; this is however set to change if recommendations from a recent listings review are put in place.

While JP Morgan and Goldman Sachs are leading the deal, Citi, Bank of America, Jefferies and Numis are also part of the syndicate of banks managing the transaction.

($1 = 0.7185 pounds)

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