Deliveroo kicks off $3.29b IPO, London’s biggest this year

LONDON- Food-delivery start-up Deliveroo Holdings has started taking investor orders in a share sale of as much as £1.77 billion (S$3.29 billion), marking the largest initial public offering in the UK since September.

Deliveroo is selling shares at £3.90 to £4.60 apiece, according to a statement on Monday (March 22), valuing the company at £7.6 billion to £8.8 billion.

The offering is the biggest float on the London Stock Exchange since THG’s £1.88 billion 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.

The company plans to sell as many as 384.6 million shares, an amount that could rise by as much as 10 per cent if there’s enough demand. Besides the £1 billion of new shares the company aims to sell, existing shareholders will also sell stock in the IPO, the company said. The company plans to to invest its proceeds to fuel growth.

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

“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, takes place online now.

Its shareholders include Amazon.com, which holds a 16 per cent stake, venture capital firms DST Global and Index Ventures, which own about 10 per cent each, and US mutual-fund company T. Rowe Price Group with a 8.1 per cent interest.

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 UK 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 firms to its stock exchange. About £4.8 billion has been raised this year in the City through IPOs, according to data compiled by Bloomberg.

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