A Deliveroo courier roams Regent Street delivering take-out food to central London during the Covid-19 Tier 4 restrictions.
Pietro Recchia | SOPA images | LightRocket via Getty Images
LONDON – Deliveroo food delivery service is trying to raise £ 1 billion ($ 1.4 billion) by selling new shares in its next initial public offering on the London Stock Exchange.
The company announced Monday that some of its current shareholders will also sell some of its shares.
Along with Amazon, Deliveroo is also supported by investors, including Durable Capital Partners, Fidelity, T. Rowe Price, General Catalyst, Index Ventures and Accel.
Deliveroo is also planning to offer £ 50 million in stock to its customers.
Some of Deliveroo’s early supporters are expected to have a 60,000% return on their investment, according to a report by the technology media site Sifted on Monday.
Deliveroo was valued at $ 7 billion in July, when it raised an additional $ 180 million from investors. Reports suggest it can be valued at around $ 10 billion after the IPO.
Goldman Sachs and JP Morgan Cazenove were appointed as joint global coordinators for the IPO. A date on which the initial public offering was not officially announced, but it is likely to be in the coming weeks.
A filing last week included details on Deliveroo’s two-class share structure, which will see Deliveroo CEO Will Shu get 20 votes per share, while all other shareholders will be entitled to only one vote per share.
Last week, the company also revealed that it had a loss of £ 223.7 million in 2020. The losses are substantially less in 2020 than in 2019, however, when the London-based company posted a loss of £ 317 million .
Although the eight-year-old company is still in the red, its revenues rose to £ 4.1 billion in 2020, from £ 2.5 billion in 2019.
Deliveroo turnaround
Deliveroo went from almost a failure in 2020 amid a review of competition in Amazon’s minority investment, to generating operating profit at the end of the year, thanks to the increased demand for online delivery services driven by the coronavirus block.
Today, Deliveroo claims to have more than 115,000 food merchants, 100,000 restaurants and millions of consumers in 12 countries. The process shows that six million orders are placed at Deliveroo every month.
Amazon supported Deliveroo in May 2019, leading a $ 575 million financing round in exchange for a 16% stake in the business.
In July 2019, the UK antitrust regulator, the Competition and Markets Authority, argued that Amazon’s Deliveroo cash injection could reduce competition, removing the possibility of the e-commerce giant re-entering the market, while Deliveroo could “cease to be distinctive.” It froze the investment for almost a year while investigating.
Much 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 close without the capital.
As interest in the food delivery market continues to grow, UBS analysts have named seven stocks in the sector that are expected to burst by up to 30%.
People who order take-out food more often – and spend more when they do – mean that the sector could reach nearly $ 400 billion in 2024, the bank said. A Euromonitor estimate, in turn, said it could be worth $ 1 trillion in the next decade.
– Additional reporting by Ryan Browne of CNBC.