Amazon-backed Deliveroo aims to raise $1.4 billion in upcoming IPO

ANASTASIA ZYG


A Deliveroo courier rides along Regent Street delivering takeaway food in central London during Covid-19 Tier 4 restrictions.

Pietro Recchia | SOPA Images | LightRocket via Getty Images

LONDON – Food delivery service Deliveroo is seeking to raise £1 billion ($1.4 billion) by selling new shares in its upcoming initial public offering on the London Stock Exchange.

The company announced Monday that some of its existing shareholders will also sell some of their shares.

Alongside Amazon, Deliveroo is also backed by investors including Durable Capital Partners, Fidelity, T. Rowe Price, General Catalyst, Index Ventures and Accel.

Deliveroo is also planning to offer £50 million of stock to its customers.

Some early Deliveroo backers stand to make a 60,000% return on their investment, according to a report from tech media website Sifted on Monday.

Deliveroo was valued at $7 billion in July when it raised an additional $180 million from investors. Reports have suggested that it could be valued at around $10 billion following the IPO.

Goldman Sachs and JP Morgan Cazenove have been appointed as the joint global coordinators for the IPO. A date the initial public offering has not been officially announced but is likely to be in the next few weeks.

A filing last week included details on Deliveroo’s dual-class share structure, which will see Deliveroo CEO Will Shu get 20 votes per share, while all other shareholders will only be entitled to one vote per share.

Last week, the company also revealed that it made a loss of £223.7 million in 2020. The losses are substantially less in 2020 than they were in 2019, however, when the London-headquartered firm recorded a loss of £317 million.

While the eight-year-old company is still in the red, its revenues climbed to £4.1 billion in 2020, up from £2.5 billion in 2019.

Deliveroo’s turnaround

Deliveroo went from near failure in 2020 amid a competition review into Amazon’s minority investment, to turning an operating profit toward the end of the year thanks to the coronavirus lockdown-driven surge in demand for online takeout services.

Today Deliveroo claims to have over 115,000 food merchants, 100,000 restaurants and millions of consumers across 12 countries. The filing shows that six million orders are made on Deliveroo every month.

Amazon backed Deliveroo in May 2019, leading a $575 million funding round in exchange for a 16% stake in the business.

In July 2019, the U.K.’s antitrust regulator, the Competition and Markets Authority, argued that Deliveroo’s cash injection from Amazon could reduce competition by removing the possibility of the e-commerce giant re-entering the market, while Deliveroo could “cease to be distinct.” It froze the investment for almost a year while it investigated.

To the disappointment of rivals Just Eat and Domino’s Pizza, the deal was approved by the CMA in August after Deliveroo said it could go out of business without the capital.

As interest in the food delivery market continues to grow, UBS analysts have named seven stocks in the sector that are set to pop by up to 30%.

People ordering takeout more frequently — and spending more when they do — means the sector could reach a value of almost $400 billion by 2024, the bank said. A Euromonitor estimate, meanwhile, said it could be worth $1 trillion in the next decade.

— Additional reporting by CNBC’s Ryan Browne.



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