Deliveroo IPO fails on London debut
British food delivery start-up Deliveroo entered the London Stock Exchange this week, but does not appear to have impressed.
Listing as Deliveroo Holdings Plc., The Amazon-backed company initially valued its shares at 3.90 pounds (~ $ 5.36), giving it an expected valuation of 7.6 billion pounds. (~ $ 10.5 billion), saw its shares fall 30%; When the market closed, the shares fell 26 percent and its share price fell as low as 2.73 pounds.
Leaders in the company’s IPO were JPMorgan and Goldman Sachs; Deliveroo has been the largest company to go public in London since Glencore, a mining group, did so in 2011.
“I am very proud that Deliveroo is going public in London – our home,” CEO and co-founder Will Shu said in a declaration.
“In this next phase of our journey as a public company, we will continue to invest in innovations that help restaurants and grocers grow their businesses, provide customers with more choice than ever before, and provide more. work to drivers.
Many experts claim that its failed start in the stock market stems from its current business model. Over the past year, food delivery services have skyrocketed due to the COVID-19 pandemic, but some believe that once we get back to normal, the boom will go away.
Additionally, UK investors have expressed concerns over the company’s plan. two-class share structure. The move – which Deliveroo plans to follow over the next three years – would give Shu more control over the company and more voting rights over other investors; this also means that the company would not be eligible for a “premium” listing which would allow it to join other FTSE indices.
Legal battle with stage workers
Along with the aforementioned investor concerns, Deliveroo has been a bit in the hot water when it comes to its riders.
Russ Mold, investor at AJ Bell, revealed that some fund managers have pulled out of the IPO due to concerns about the company’s working practices.
“It probably scared a lot of people who asked for shares in the IPO offering, which means they are rushing to give them up,” he said.
Sure April 7, on the day unconditional trade begins for Deliveroo, hundreds of the company’s runners plan to strike to protest its current approach to workers’ rights in relation to wages and terms and conditions.
The Self Employed Union of Great Britain (IWGB) has urged potential investors in Deliveroo to consider the food delivery service’s business model before taking action. From there, Legal & General Investment Management, Aviva Investors and Aberdeen Standard Investments announced that they would not participate in the IPO.
IWGB President Alex Marshall said, “Investing in Deliveroo means joining the exploitative and unstable business model that he advocates and has set aside millions of dollars to defend. That means signing up to support a company condemned by Parliament during the pandemic for endangering public health and for applauding and then dismantling key workers without due process. “
In February, the UK Supreme Court ruled that Uber – which had faced similar protests across the pond – should classify its drivers as employees rather than independent contractors; this includes providing them with a minimum wage, vacation pay and pensions.