Amazon-backed Deliveroo is expected to be valued at up to £8.8 billion when the food delivery app starts selling its shares on the London Stock Exchange LSEG,
Deliveroo, which is 16% owned by online retailer Amazon AMZN,
The sale consists of as many as 384.6 million shares, excluding any shares offered as part of an overallotment issue. Of that, around £1 billion of new shares have been set aside for the company itself, with the rest going to existing investors who are selling shares.
Deliveroo plans to invest the proceeds of the IPO to further its growth, which has soared during the COVID-19 pandemic as government-enforced lockdowns have closed restaurants. That helped propel San-Francisco-based DoorDash DASH,
In a short trading update, Deliveroo said gross transaction value (GTV) — which measures the total value of orders it receives — rose 121% in January and February compared with the same period last year.
“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,” said Will Shu, the co-founder and chief executive of Deliveroo.
However, some analysts are starting to question whether food delivery services companies will be able to sustain their rapid levels growth as COVID-19 vaccinations gather pace and customers return to eating out. DoorDash recently forecast that demand for home-delivered food would moderate in 2021, with order growth expected to be in double, rather than triple, digits.
“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 favorite eateries when restrictions do ease,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“Competition in the sector is also fierce, and Deliveroo competes with Uber Eats, Just Eat TKWY,
Deliveroo is the latest company to take advantage of a red hot IPO market, which is on track for a record first quarter in terms of proceeds raised from new listings, after a series of companies, including cult boot maker Dr. Martens DOCS,
Deliveroo plans to issue dual-class shares that would keep Shu in control for three years.
The structure, which is more common in the U.S. — where it is used by companies including technology giants Google parent Alphabet GOOGL,