UK-based online food delivery service Deliveroo floated on the London Stock Exchange this morning in a £1.5bn ($2.07bn) initial public offering, scoring an exit for e-commerce group Amazon.
The company issued about 256 million shares while its shareholders sold a further 128 million. They were priced at £3.90 each – at the foot of the IPO’s £3.90 to £4.60 range – but have fallen to £2.95 at time of writing, cutting its market capitalisation to about $5.7bn.
Deliveroo runs an app-based online platform that allows users to order food from nearby restaurants and eateries that is delivered by its riders. It has added a subscription service called Deliveroo Plus to its offering as well as its own kitchens under the Editions brand and delivery software platform Signature.
The reason for the first-day price fall is likely related to negative publicity for the company in the run up to the offering surrounding its employment model and treatment of its workers.
The IPO prospectus shows Deliveroo made a loss of about $305m in 2020, though the adjusted earnings before interest, taxes, depreciation and amortisation takes that down to $11.4m. Its revenue grew 57.5% year on year to $1.6bn in the same period.
Deliveroo’s valuation stood at $7bn just two months ago, when it completed a $180m series H round co-led by investment and financial services group Fidelity Management & Research and private equity firm Durable Capital Partners to take its overall funding to $1.68bn.
Amazon had led a $575m series G round for the company in mid-2019 that also featured Fidelity, T Rowe Price and Greenoaks Capital. Its earlier backers include Bridgepoint, DST Global, General Catalyst, NGP Capital, Accel, Index Ventures and Hummingbird Ventures.
Amazon is selling 23.3 million shares in the offering for a total of $125m and is set to come out with an 11.5% stake, down from 15.8%. Index Ventures is divesting $85.4m of shares and will emerge with a 7.5% stake while DST Global is selling $78.8m and will hold 7.4% post-IPO.
The company’s other notable investors are Greenoaks Capital (6.6% post-IPO), T Rowe Price (6.5%), Fidelity (5.9%), Bridgepoint (4.1%) and Accel (4%).
Goldman Sachs International and JP Morgan Cazenove are joint global coordinators for the offering while the joint bookrunners are BofA Securities, Citigroup, Jefferies and Numis.
Photo courtesy of Deliveroo.
