The food delivery company Deliveroo set its market value range of $12 billion which could see the company making the biggest stock market debut in the United Kingdom since the public listing of commodities giant Glencore almost a decade ago.
This Initial Public Offerings (IPO) is of significant importance for the British government and it has been putting up the IPO of this Amazon-backed food delivery firm as proof that the City of London can still attract some of the major IPOs even after the exit of the UK from the European Union.
According to data provided by the London Stock Exchange, the proposed Deliveroo IPO would be the biggest listing of London since Glencore in May 2011. The public listing of Allied Irish Banks in 2017 at the London stock market is not included in this list because at the time of its London listing, it already had a small listing in Ireland.
If the Dleiveroo IPO goes through, it would also be the largest tech IPO ever for the LSE – eclipsing the £5.4 billion market capitalisation at the time of the listing by The Hut Group last year as well as the 2015 IPO of the now delisted Worldpay Group.
During 2020, Deliveroo has significantly benefitted from the closure of restaurants for anything other than takeaways during the Covid-19 crisis. The revenues of the company have soared with a 64.3 per cent rise in its so-called gross transaction value – which measures the total value of orders received – to reach a total of £4.1 billion.
However there are doubts about whether the food delivery firm will be able to maintain the growth momentum after the end of the pandemic induced restrictions and be able to generate profits after it posted an underlying loss of £223.7 million pounds last year.
“Deliveroo has clearly had a Covid boost,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “Although this insatiable demand for takeout food isn’t likely to fully unravel, there is inevitably going to be a drop in demand as diners seize the opportunity to book tables at their favourite eateries when restrictions do ease.”
Excluding any shares offered as part of an over-allotment issue, the company expects to achieve a market value of between £7.6 billion and £8.8 billion as it has set a price range for its listing of between £3.90 and £4.60 per share, Deliveroo said.
The company will not pursue a premium listing which rules it out of inclusion in the FTSE indices. That would give the opportunity for the company’s founder and chief executive Will Shu to hold on to increased shareholder rights.
In January and February this year, there was a 121 per cent year on year rise in the total gross transaction value on its platform. Deliveroo said in a short trading update.
“We have seen a strong start to 2021 and we are only at the start of an exciting journey in a large, fast-growing online food delivery market, with a huge opportunity ahead,” Shu said in a statement.
(Adapted from ChannelNewsAsia.com)