Deliveroo flotation set to value company at up to €10bn

Flotation expected to take place during the first half of this year

Deliveroo's IPO could value it at between €8.8bn and €10.2bn.

Food delivery company Deliveroo has said its planned stock market listing in London could value the company at up to £8.8bn (€10bn).

While no date for the IPO has been given, the flotation is expected to take place during the first half of this year. Deliveroo confirmed its plans earlier this month and has now offered a listing price range for its shares.

London Stock Exchange

It will initially sell its shares on the main market of the London Stock Exchange at somewhere between £3.90 and £4.60 per share. This implies an estimated market value for Deliveroo of between £7.6bn and £8.8bn.

"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," said Deliveroo founder and chief executive Will Shu. 

"This will help us in our mission to become the definitive food company. We have enjoyed 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," he said.

In a trading update, Deliveroo said the value of customer transactions rose by 121%, year-on-year, across January and February in the UK and Ireland.

The Amazon-backed company has benefited from the closure of restaurants for anything other than takeaways during the Covid crisis and revenues have soared accordingly, with so-called gross transaction value – which measures the total value of orders received – rising 64.3% in 2020 to £4.1bn.

But it faces questions on whether that momentum will continue after Covid restrictions are eased and be enough to turn the business towards profit after it posted an underlying loss of £223.7m last year.

Covid boost

“Deliveroo has clearly had a Covid boost,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Although this insatiable demand for takeout food isn’t likely to fully unravel, there is inevitably going to be a drop in demand as diners seize the opportunity to book tables at their favourite eateries when restrictions do ease.”

Deliveroo looks set to be the biggest stock market listing in Britain in a decade. It will also be the biggest tech IPO on the LSE, dwarfing The Hut Group from last year, which had a £5.4bn value at the time of listing. 

Deliveroo has been held up by the British government as a sign the City of London can still attract major IPOs following the country exiting the EU.

New shares will raise £1bn for Deliveroo and the rest will be made up by existing shareholders selling part of their stake.

Deliveroo has opted not to pursue a premium listing – ruling it out of inclusion in the Ftse indices – which allows Mr Shu to retain enhanced shareholder rights.

• additional reporting Reuters