Deliveroo aims for £8.8bn listing

August Graham, PA City Reporter
·3-min read

Takeaway company Deliveroo is expected to be valued at up to £8.8 billion when it starts selling its shares on the stock exchange in London.

The business aims to sell shares for around 390p to 460p each, it revealed on Monday, in what is expected to be one of the biggest public listings of the year.

The share price will value the entire business at between £7.6 billion and £8.8 billion, Deliveroo said. The company is yet to make a profit.

Susannah Streeter, an analyst at Hargreaves Lansdown, said: “This is towards the upper end of expectations given that in January an investment round, which saw the company gain a £129 million investment, put a value on the company of around £5 billion.”

The company will create new shares that it will sell to investors, raising about £1 billion in the process. Existing shareholders will also sell off some of their stake.

Chief executive Will Shu said: “We are proud to be listing in London, the city where Deliveroo started.

“Becoming a public company will enable us to continue to invest in innovation, developing new tech tools to support restaurants and grocers, providing riders with more work, and extending choice for consumers, bringing them the food they love from more restaurants than ever before.

“This will help us in our mission to become the definitive food company.”

Deliveroo revealed that the value of transactions on its platform rose 121% between January and February last year and the same two months in 2021.

Amid lockdowns in the UK and Ireland, the gross transaction value (GTV) – as the company calls the measure – rose 130%.

In Deliveroo’s other markets GTV was up 112% in the first two months of the 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,” Mr Shu said.

Earlier this month Deliveroo revealed that GTV grew by 64% in 2020.

The flotation will mark a long-anticipated public listing in the company.

On Sunday, Sky News reported that Mr Shu will look to sell off a stake in the business when it lists.

He is likely to sell less than a tenth of his 6.2% holding in the business, which could be valued at around £550 million after the float.

Deliveroo will come to market shortly after its rival, Uber, reclassified its UK gig economy drivers as workers, giving them the right to holiday pay, workplace pensions and minimum earnings.

For now that does not apply to Uber Eats – the food delivery arm of the business.

Hargreaves Lansdown’s Ms Streeter said: “However it’s clear the challenge to Deliveroo’s contractor model is likely to continue, and the European Commission is set to draw up new legislation governing how the gig economy model works across the bloc.

“If it is forced to change the way it classifies its riders in the future, it is likely to puncture its profits prospects, and could even derail the delivery giant.”