Deliveroo targets range of up to £8.8bn valuation in forthcoming London listing, as it sees transactions double year-on-year for first two months of 2021
Food delivery firm Deliveroo is seeking a valuation of £7.6 billion to £8.8bn as it prepares to list on the London stock market.
The Amazon-backed company said it would sell shares at between 390p and 460p in the biggest UK listing in more than seven years.
Deliveroo said it plans to sell about £1bn of new shares and would invest the proceeds to invest in its business, including enhancing the platform and pushing further into the grocery delivery market, which has surged during the pandemic.
“We are proud to be listing in London, the city where Deliveroo started,” said chief executive and founder Will Shu in a statement.
“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.”
Deliveroo said it saw the total value of transactions more than double in the first two months of the year during the latest UK coronavirus lockdown.
UK hospitality businesses are due to see restrictions eased on 12 April at the earliest.
Volumes grew 130 percent year-on-year in the UK and 112 percent in other markets.
“We have seen 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,” Shu said.
Founded in 2013, Deliveroo operates in more than 200 towns and cities in the UK as well as overseas in 12 countries, including mainland Europe, Asia, Australia and the Middle East.
Business model challenge
The company is giving customers an opportunity to buy shares and is to reward delivery riders with bonuses of up to £10,000.
One major challenge Deliveroo faces involves its self-employed business model, which sees riders treated as independent contractors.
The firm competes with Uber Eats and Just Eat, both of which are shifting toward an employee model that would see them paying hourly wages, sick pay and pension contributions.
This follows a February UK Court of Appeals decision confirming that Uber’s drivers should receive holiday pay, pension contributions and the minimum wage.
By contrast, Deliveroo has stuck with its contractor model to date, seeing off court challenges that sought to make changes.
In October of last year a California appeals court also confirmed an earlier ruling that drivers for Uber and Lyft must be treated as employees.
But the following month California voters approved Proposition 22, which allows such drivers to retain contractor status while being granted some limited benefits, such as minimum hourly earnings.