Deliveroo, the food delivery company, said it will list its initial public offering at 390 (£3.90) pence per share, at the bottom end of a previously indicated range due to volatile market conditions. Deliveroo initially intended to price its offering between £3.90 and £4.60 per share.
The British food delivery start-up now expects to be listed with a market capitalization of between £7.6 billion ($10.46bn) and £7.85bn, instead of its earlier target of £7.6bn to £8.8bn. The company expects the investment in its shares to cross the deal size and has the potential to be the largest IPO for the decade on the London Stock Exchange.
“Deliveroo has received very significant demand from institutions across the globe,” the company said on Monday.
It will be listed on March 31 and is set to be the biggest on LSE since Glencore in 2011, and even outstrips The Hut Group listing of £1.88bn last September. However, private investors buying in through its £50m share offer will only be able to start trading on April 7.
“The deal is covered multiple times throughout the range, led by three highly respected anchor investors. Given volatile global market conditions for IPOs, Deliveroo is choosing to price responsibly within the initial range and at an entry point that maximizes long-term value for our new institutional and retail investors.”
Deliveroo will list mainly new shares to raise up to £1bn. It intends to operate a dual-class share structure for three years that will allow Will Shu, the co-founder of the company to retain control.
Additionally, it has a community offer, specially designed for Deliveroo customers, and riders who have delivered the most orders will share in a £16m fund, the company said.
Deliveroo’s lower market target is because investment managers deem the company model reliant on gig economy workers not robust and question its sustainability.
Aviva Investors said it would not invest in the deal because Deliveroo’s riders in the UK did not receive the minimum wage, sick leave or holiday pay. One union representing gig workers has called on Deliveroo workers to go on strike next Wednesday in protest against inadequate workers’ rights.
Deliveroo said it would offer riders bonuses of between £200 to £10,000 when it floats, depending on the number of deliveries they have made.
“Riders are self-employed because this gives them the freedom to choose when and where to work,” a Deliveroo representative said.
Workers lost a legal challenge to Deliver in 2018 when a court declared that the workers were self-employed.
Shu founded Deliveroo in 2013 in London, England. It operates in over two hundred locations across the United Kingdom, the Netherlands, France, Belgium, Ireland, Spain, Italy, Australia, New Zealand, Singapore, Hong Kong, the United Arab Emirates and Kuwait. It also has a subsidiary, Deliveroo Editions, which operates off-site kitchens for restaurants to make deliveries easier.
