One of Deliveroo’s own IPO investment banks offered to help hedge funds short the company’s shares after its disastrous stock market flotation, it was claimed today.
The food delivery group’s £7.6 billion stock market flotation, run by JPMorgan and Goldman Sachs, was dubbed Flopperoo after the shares crashed on its IPO debut in March.
At the time, its banking advisers let it be known that a short-selling attack was behind the tumble, blaming aggressive anonymous hedge funds.
In an extraordinary twist, one hedge fund has told the Standard it was JPMorgan who had offered to lend him shares to short just after the IPO.
The fund manager, who declined to be named, said JPMorgan brokers had offered him the stock at a fee of 2.5%.
In order to short shares, investors must first borrow it from shareholders. This is organised by prime brokerages, of which JPMorgan is one of the biggest in the market.
JPMorgan declined to comment, but the issue shines a light on the potential for conflicts of interest at big banks which earn money both as investment bank advisers and brokers.
In the event, the hedge fund in question did not take JPMorgan up on the offer.
It has emerged in the weeks since the IPO that short selling does not appear to have been a major factor in the IPO’s poor performance.
Not a single major short position has been notified to the Financial Conduct Authority register, suggesting that the initial price of the float was simply set far too high.