JPMorgan Chase – Deliveroo Expected to price London IPO at Bottom of Range
Food-delivery startup Deliveroo Holdings Plc is likely to price shares in its initial public offering at 390 pence each, the bottom of the range at which they were marketed, as reluctant investors and nervous markets weigh on London’s biggest listing this year.
The sale will raise 1.5 billion pounds ($2.1 billion) at that price, assuming the company and its shareholders sell all of the 384.6 million shares on offer, below the 1.77 billion pounds that Deliveroo could have garnered at the high end of the range. Books on the offering close Tuesday at 1 p.m. London time, according to terms on the expected pricing seen by Bloomberg News, with trading to begin Wednesday.
Deliveroo’s offering, which will value the company at 7.6 billion pounds, has been plagued by a growing list of funds saying they won’t buy shares over concerns that the company’s treatment of couriers doesn’t align with responsible investing practices. Hundreds of riders are also expected to refuse to make deliveries when the shares begin trading on Wednesday.
Some institutions have also balked at the company’s dual-class share structure, which will give Chief Executive Officer Will Shu outsized voting rights for three years, saying it throws up issues around corporate governance.
Deliveroo has orders for multiple times the number of shares on offer, and 30% of the deal has been reserved for three anchor investors, a person familiar with the transaction said.
Although the company has been pitching its lockdown gains to investors, shares of peers such as Just Eat Takeaway.com NV, Delivery Hero SE and meal-kit maker HelloFresh SE have fallen this year as the vaccine rollout has raised hopes of economies reopening.
Read More: Deliveroo Hit by Investor, Rider Revolt Ahead of London IPO
The protests and public shunning of the IPO have put a damper on what was seen as a flagship offering for London after Brexit. The City has worked hard to highlight its status as a global financial center, studying ways to attract more high-growth listings like Deliveroo and bring the market closer in line with heavyweights New York and Hong Kong.
But the tepid response to Deliveroo is a blow to the government’s impending revamp of the UK. listing rules, which include proposals like allowing dual-class share structures on the premium segment of the London Stock Exchange. Meanwhile, London is still hemorrhaging unicorns to New York, like used-car platform Cazoo Ltd. and medical startup Babylon, which is said to weigh floating in the U.S.
Deliveroo on Monday narrowed the price range to 3.90 pounds to 4.10 pounds a share, in the lower half of an indicative range of 3.90 pounds to 4.60 pounds. At the high end of the original target, the company would have had a stock market value of 8.8 billion pounds.
There are other signs the buoyant IPO market at the start of the year is beginning to lose steam. One week ago, Danish consumer-review site Trustpilot Group Plc disappointed in its debut, erasing gains of as much as 16%. The stock is now trading below its offer price.
Other deals have been pulled altogether. The owners of GV Gold PJSC, a Russian miner backed by BlackRock Inc., put its IPO on indefinite hold Monday, days after Belgian soccer team Club Brugge postponed a Brussels listing. Italy’s Leonardo SpA also canceled the U.S. IPO of its DRS unit last Wednesday.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. are joint global coordinators on Deliveroo’s offering, while Bank of America Corp., Citigroup Inc., Jefferies and Numis Securities Ltd. are joint bookrunners.
— With assistance by Kit Rees
(Adds details on demand for the offering in fifth paragraph, performance of food-delivery stocks in sixth paragraph)