Amazon-backed Deliveroo is expected to be valued at 8.8 billion when the food delivery app starts selling its shares on the London Stock Exchange LSEG,
in what will be one of the city’s biggest initial public offerings in years.
Deliveroo, 16% owned by online retailer Amazon AMZN,
set a price range for its listing of between 3.90 and 4.60 per share, valuing the company between 7.6 billion and 8.8 billion ($ 12.2 billion), the company said in a declaration Monday.
The sale includes up to 384.6 million shares, excluding shares offered as part of an overuse issue. Of that amount, around 1 billion new shares have been reserved for the company itself, with the remainder going to existing investors who sell shares.
Read: Amazon-backed Deliveroo Prepares To Test A Burning Global IPO Market
Deliveroo plans to invest the proceeds of the IPO to continue its growth, which has skyrocketed during the pandemic as government-imposed lockdowns have closed restaurants. This helped propel San Francisco-based DoorDash DASH,
at a valuation of over $ 60 billion when it went public in New York in December.
In a short trade update, Deliveroo said gross transaction value (GTV), which measures the total value of orders received, increased 121% in January and February compared to the same period last year.
We have seen a good start to 2021 and we are only at the beginning of an exciting journey into a large, fast growing online food delivery market, with a huge opportunity ahead, said Will Shu, co-founder and Managing Director of Deliveroo. .
Read: DoorDash shares tumble as revenue more than tripled but loss more than doubled
However, some analysts are starting to question whether food delivery service companies will be able to sustain their rapid growth as COVID-19 vaccinations accelerate and customers start eating out again. DoorDash recently forecast that demand for home-delivered food products will moderate in 2021, with order growth expected to be double digits, rather than three.
While this insatiable demand for take-out is not likely to collapse entirely, there will inevitably be a drop in demand as diners seize the opportunity to reserve tables at their favorite restaurants when restrictions ease. said Susannah Streeter, senior investment and markets analyst at Hargreaves. Lansdown.
Competition in the industry is also fierce, and compete with Uber Eats, Just Eat TKWY,
and a host of others, Streeter said, adding that Just Eat had previously announced plans to strengthen its operations in the UK.
Read: London to revise listing rules to attract tech IPOs and cash in blank check boom
Deliveroo is the latest company to benefit from an IPO market, which is on track for a record first quarter in terms of revenue from new listings, after a string of companies including cult shoe maker Dr. Martens DOCS,
and online greeting card reseller
debuted in the LSE market in recent weeks.
Deliveroo plans to issue dual class shares that would keep Shu under control for three years.
The structure, which is most common in the United States where it is used by companies including tech giants, Google Parent Alphabet GOOGL,
and Facebook FB,
comes amid a UK government-backed report released in February that recommended London allow founders to retain control after listing and reduce the amount of equity a company has to sell to foreigners, in order to ” encourage technology companies to choose the city for their IPOs.