Deliveroo Selects London for a $7 Billion Dual-Class IPO

By Mariliana Fotopoulou Thursday, March 4, 2021

Deliveroo, the British food delivery company, says it has selected London to conduct the initial public offering (IPO) later in the year.

Deliveroo courier making a delivery on a bicycle.

A Natural Fit

Deliveroo recently raised $180 million in new funding at a $7 billion valuation, which makes the upcoming IPO one of the biggest offerings in the UK this year. The delivery company has opted for a dual-class IPO, a tool available for companies that want to have differing voting rights.

“Deliveroo was born in London. This is where I founded the company and delivered our first order. London is a great place to live, work, do business and eat. That’s why I’m so proud and excited about a potential listing here,” said CEO Will Shu in a statement.

The dual-class IPO is likely to result in two classes of shares, usually Class A and Class B. Both classes of shares represent an ownership in the same company, but the voting rights differ. This IPO type is usually used by CEOs who are seeking greater control of a company after an IPO.

In this case, the dual-class share structure will expire after three years, when the company will make a shift to a traditional single-class share structure. Following a shift to a single-class structure, the food delivery business will be able to join the major FTSE indices.

“The UK is one of the best places in the world to start, grow and list a business — and we’re determined to build on this reputation now we’ve left the EU. That’s why we are looking at reforms to encourage even more high growth, dynamic businesses to list in the UK,” said British Finance Minister Rishi Sunak.

“Deliveroo has created thousands of jobs and is a true British tech success story. It is great news that the next stage of their growth will be on the public markets in the UK,” he added.

Deliveroo became profitable in the second part of the last year after the pandemic-fueled lockdowns around the globe forced people to order food. The delivery company is backed by Amazon and Fidelity, among others, with the former receiving a green light from the British regulators in August last year to buy a 16% stake in the food delivery business. Amazon previously led a $575 million funding round for Deliveroo.

Reuters reports that Goldman Sachs and JP Morgan are leading the IPO, while Bank of America, Citi, Jefferies, and Numis are also participating.

Summary

Deliveroo has opted for a dual-class share structure for the upcoming London IPO. The company has a reported business valuation of $7 billion.

About the Author


Headshot of Mariliana Fotopoulou

Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.

Related Articles