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Deliveroo launches $ 2.5 billion initial public offering, the UK’s largest initial public offering in 2021

(Bloomberg) – Food delivery startup Deliveroo Holdings Plc has begun accepting investor orders in a stock sale of up to 1.77 billion pounds ($ 2.45 billion). This is the UK’s largest IPO since September. Deliveroo is selling shares at 3.90, according to a statement Monday, the offer is the largest float on the London Stock Exchange since Bloomberg’s September 1.88 billion offer by THG Plc. The company will be taking investor orders through March 30, with the stock expected to begin trading the next day, according to Bloomberg News. The sale is for up to 384.6 million shares and that amount could be increased by up to 384 million 10% if demand is sufficient. In addition to the £ 1 billion the company plans to raise to sell new shares, existing shareholders will also offer shares as part of the IPO, Deliveroo said, without giving any details. It is planned to invest its proceeds to fuel growth. Deliveroo had amassed enough investor demand within hours of the book’s opening to cover full business size across the price range, a time when coronavirus restrictions drove demand for grocery deliveries soaring. Gross transaction value – the total value of purchases on its platform – increased 121% in January and February year over year, after increasing 64% in 2020. Deliveroo said it would be “operationally level” for more than six months in 2020 “Was profitable. Still, the company posted an underlying loss of £ 223.7 million for the year. “Having the food category available online is a huge market opportunity.” It is said that fewer than one in 21 meals per week, including breakfast, lunch and dinner, are now ordered online. The opportunity to compete for the sector “has always been there,” but there is also competition, said Shaunak Mazumder, a global equity fund manager at Legal & General Investment Management, adding that he would have preferred the offer “to fall slightly below the range would be to give more IPO discount and possibly slower growth to allow for if we get out of lockdown. ”D. eliveroo competes with Uber Eats and Just Eat NV from Uber Technologies Inc., as well as with a variety of smaller apps for the delivery of food. Advances in the launch of vaccines in the UK, Deliveroo’s largest market, threatens to result in a decline in home dining later this year. However, if the company manages to hold onto its lockdown profits and keep up with restaurant signings, it would be “attractive,” Mazumder said. According to some analysts’ estimates, the company will not be profitable again until 2023, said Dev Chakrabarti, portfolio manager at AllianceBernstein: “What you cannot grasp is how competitive the market will be and whether any of the other big players will throw in the towel and go. Until then, pricing will likely stay in promotional mode rather than rational, ”he said. Food suppliers are also facing mounting questions about the gig economy model, particularly following a ruling by the UK Supreme Court last week that Uber will reclassify all 70,000 drivers in the country as guaranteed benefits under UK law. While this does not apply to the Uber Eats brand, “the sector is blown by winds,” said Susannah Streeter, an analyst at Hargreaves Lansdown Plc. In an emailed statement, “It is clear that the challenge for the contract model of Deliveroo is likely to continue, ”she said, noting that the European Commission will be drafting new laws regulating how the gig economy model works across the bloc. Just Eat Takeaway has already committed to offering UK workers hourly wages, sick pay and pension contributions. This month Deliveroo announced plans to set up a fund to help restaurants and grocers rebuild their businesses after the pandemic, and will also grant its “longest tenure” and hardest-working drivers “individual payments of up to £ 10,000. The company will also make £ 50 million of shares available to customers as part of a “community offering”. Dual-Class StructureDeliveroo is listed in two share classes, giving Chief Executive Officer Will Shu oversized voting rights for three years. Shu owns 6.1% of the company according to a registration document that would be worth up to £ 540 million at the high end of valuation expectations released Monday. The offer comes after a government-backed report earlier this month made a lot of recommendations to reform UK listing rules, including allowing such two-class share structures in the premium segment of the LSE, but it could take months to implement become. The proposals are part of London’s attempts to maintain its clout as a major financial center in a post-Brexit world and attract fast-growing tech companies to its stock market. According to Bloomberg, about £ 4.8 billion were raised in the UK through IPOs in the first three months of the year. This could be the busiest first quarter listing in town yet. Even at its lowest point At the end of the price range, Deliveroo would have the highest market value for a company to go public in London since Allied Irish Banks Plc listed in June 2017 with a market value of 12 billion euros. Amazon is one of Deliveroo’s shareholders. com Inc., which has a 16% stake, venture capital firms DST Global and Index Ventures, each owning approximately 10%, and US mutual fund company T. Rowe Price Group Inc., which has an 8.1% stake. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are joint global coordinators of the offering, while Bank of America Corp., Citigroup Inc., Jefferies and Numis Securities Ltd. common bookrunners are Please visit us at bloomberg.c omSubscribe now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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