Deliveroo’s initial public offering was set to be the largest in a decade for the London Stock Exchange, but its shares slumped up to 31% on its debut.
The British food delivery, which is still the most valuable tech company to list in London, had earlier this week had to slash its offer price to the bottom end of its initial range of 390 pence per share and a $10.4 billion valuation.
Deliveroo’s shares plunged to lows of 276p per share before stabilizing at 299p per share midmorning with the slump knocking $2.6 billion off the Amazon-backed company’s value. Deliveroo’s opening marked one of the worst debuts in recent years for a London-listed company.
The London-based tech company had hoped to list at the top end of its IPO pricing with a $12 billion valuation but leading investors in the United Kingdom declined to buy shares after baulked over a voting structure that allowed founder and CEO Will Shu to outvote shareholders, and the company’s treatment of its army of self-employed drivers
"I am very proud that Deliveroo is going public in London - our home,” said Shu in a statement. “In this next phase of our journey as a public company we will continue to invest in the innovations that help restaurants and grocers to grow their businesses, to bring customers more choice than ever before, and to provide riders with more work.”
The disappointing IPO will dent attempts to boost London over New York and Hong Kong as a destination for nascent and fast-growing startups seeking to raise capital in the public markets. A proposal to allow companies like Deliveroo to take on a dual share class structure, in which founders have a ‘golden share’ outweighing other investors, and be brought into the premium section of the stock exchange and included in the FTSE 100 index has been cheered by Prime Minister Boris Johnson’s government but has been met with disquiet from investors.
Still, Wednesday’s initial public offering will be the largest on the London Stock Exchange since Glencore’s listing in 2011. The IPO for a homegrown tech company should have been a draw for investors, but some of the biggest money managers in the U.K. like Aberdeen Standard, Aviva Investors, and LGIM announced they would sit out the listing.
A long-running campaign from a small trade union that represents Deliveroo’s army of freelance drivers appears to have been heard in the boardrooms of the City of London, the city’s financial district. The Independent Workers’ Union of Great Britain has claimed that the teal-clad drivers, who are a ubiquitous sight now on streets across the U.K., can be paid just $2.76 (£2) per hour despite Deliveroo’s claim that most make $13.7 (£10) per hour.
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Deliveroo Share Slumps 30% On Market Debut - Forbes
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