Deliveroo IPO preview: losses narrow as company aims to raise £1 billion

The Deliveroo IPO has been announced and we now know the food delivery company will be listed on the London Stock Exchange. The IPO is targeted to raise £1 billion, but what does that mean for the future price of Deliveroo shares?

  • Deliveroo expected to launch an initial public offering (IPO) soon
  • The float is expected to raise £1 billion on the primary market
  • Share price range details yet to be announced
  • The company has stated it will use a dual listing structure

Deliveroo IPO: the basics

A date for the Deliveroo IPO hasn’t yet been set. However, the company has stated that it will use a dual listing structure on the London Stock Exchange (LSE) and is planning to raise £1 billion. This decision comes after the British government changed the rules regarding the founder keeping control of their company, despite selling shares. In light of this change, Deliveroo founder and chief executive officer (CEO) Will Shu will still own shares in the company he started in 2013.

That means the Deliveroo IPO will split shares into two classes:

  1. Class A Deliveroo shares
  2. Class B Deliveroo shares

Class A Deliveroo shares

Deliveroo shares in this category will be sold during the IPO. They will be a mix of new and existing shares in the company, with Deliveroo aiming to raise £1 billion from their sale. Institutional investors outside of the US will be the primary target. However, private investors will be able to purchase Class A shares in Deliveroo.

The company is handling this in a unique way compared to other IPOs. It’s expected that £50 million shares will be available to existing Deliveroo customers. Therefore, the sale is on an invite-only basis. Anyone that isn’t a Deliveroo customer can register their interest via the site/app. However, those already with active accounts will take precedence.

Learn more about how you can take a position on Deliveroo shares with us

Class B Deliveroo shares

These will not be sold as part of the Deliveroo IPO. Instead, they will be held by founder and CEO Will Shu. As per the terms of the listing, Shu will have 20 votes for every one vote made by a Class A shareholder.

This is different from other shareholder arrangements on LSE and gives Shu more control over the company he founded. The dual share structure is set to remain in place for three years. At this point, Class B shares will convert to Class A shares and become eligible for sale to institutional and private investors.

Deliveroo share price expectations

The Deliveroo share price is not yet known as the company hasn’t published a prospectus. More information will be available when a date for the IPO is confirmed. What we do know, however, is that Deliveroo wants to raise £1 billion from the sale of its shares.

We also know that, as of 2020, the company had 2300 employees, connections with over 115,000 restaurants in 12 countries, and its riders serve six million customers in these countries. Revenue for 2018 was £476 million, and Deliveroo also secured £132 million of private funding in January 2021, placing its projected value at more than £5 billion. Also worthy of note is that Deliveroo's gross transaction value (GTV) grew to 8.8% in 2020, from 5.8% just two years prior. Furthermore, the company stated that it saw good gains on its 'adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) basis' last year. The delivery company saw gross profits of £358 million in 2020, compared to £189 million the previous year.

At this price, the Deliveroo IPO will be the largest LSE IPO by market capitalisation since Royal Mail in 2013. Goldman Sachs and JP Morgan have been appointed as Joint Global Co-ordinators. Merrill Lynch International, Citigroup Inc, Jefferies International Limited, and Numis Securities Limited will act as Joint Bookrunners for the offer.

One final point to note is that this isn’t a formal prospectus. Deliveroo’s 15 March press release only signalled its intention to list on LSE. At this stage, all details are subject to change.

'This announcement is not a prospectus and not an offer of shares for sale in any jurisdiction, including in or into Australia, Canada, Japan, or the United States', reads the recent press release.

Deliveroo fundamentals at a glance

  • Founded in 2013 as a food delivery company by Will Shu
  • A total of 6 million customers and 115,000+ restaurant partners in 12 jurisdictions
  • Revenue in 2018 was £476 million
  • £132 million private funding secured in January 2021, taking value to £5 billion+
  • Dual listing on LSE, aiming to raise £1 billion.
  • No guidance on the Deliveroo share price at this stage

Find out how you can take a position on the Deliveroo IPO before and after the listing

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