Shares in Deliveroo tumbled after opening below the initial public offering offer (IPO) price on the London Stock Exchange (LSE) Wednesday, falling by 24 percent at 1:30 pm (GST). The stock, with the ticker name “ROO”, was last trading at £2.95 ($4.06).
The offer price had been set at £3.90 ($5.37) per share, equating to a market capitalisation of £7.59 billion ($10.41 billion), the company said earlier in a statement.
It is considered to be the largest IPO in the London market in a decade
The stock began conditional dealing on the LSE today, selling 384.6 million shares at the offer price and raising £1.5 billion. Of that, £1 billion will go to the company itself and £500 million will go to existing shareholders, including Amazon and Will Shu, the company’s CEO.
The 3.90 pounds price tag gave an overall valuation of 7.6 billion pounds for the company, less than initially expected. Some UK fund managers reportedly said they would not take part, citing concerns its gig economy business model and concerns over Deliveroo’s treatment of its drivers.
Amazon, which is a major investor in the app-driven delivery company, is set to sell around 23.3 million shares as part of the IPO, according to the prospectus.
Shu said earlier on Wednesday: “In this next phase of our journey as a public company we will continue to invest in the innovations that help restaurants and grocers to grow their businesses, to bring customers more choice than ever before, and to provide riders with more work. Our aim is to build the definitive online food company and we’re very excited about the future ahead."
JPMorgan and Goldman Sachs led the listing, along with Bank of America Merrill Lynch, Citi, Jeffries and Numis.
(Writing by Brinda Darasha; editing by Seban Scaria)
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