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Deliveroo narrows losses to £223m as it plans London IPO

Deliveroo confirmed its plans to IPO in London. Photo: Toby Melville/Reuters
Deliveroo confirmed its plans to IPO in London. Photo: Toby Melville/Reuters (Toby Melville / reuters)

Takeaway courier company Deliveroo on Monday confirmed its hotly anticipated initial public offering (IPO) will take place in London, also saying that it had narrowed its losses in 2020 to £223.7m ($309.4m)

That's compared with a loss of £317.3m in 2019, following a bumper year partially due to stay-at-home orders during the coronavirus pandemic.

Deliveroo's IPO will take advantage of the dual-class share structure, which will last for three years and could see the company valued at £8bn.

The official announcement comes following news released by the company over the weekend that it would make £50m of shares available to its customers in a “community offer.”

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The company also said it would offer up of up to £10,000 to its busiest riders with a £16m "thank you" fund.

Will Shu, founder and CEO of Deliveroo said in a statement on Monday: "Now we take the next big step in our journey by allowing everyone to have a share in our future.

READ MORE: Budget 2021: Rishi Sunak to lure tech and SPACs with stock market overhaul

"That's why we are planning to take Deliveroo public here in London, the city where it all started – and we plan to offer our customers across the UK the chance to own a part of the business."

Deliveroo's move for London comes just days after UK chancellor Rishi Sunak said the UK would change rules to allow founders to maintain control of their companies despite selling shares on the stock market.

The move was a bid to convince more high-growth tech businesses and "blank cheque", also known as SPACs (special purpose acquisition companies), to list shares in London.

The push to modernise the UK's public markets comes amid concerns that the UK is falling behind other international markets, notably the US.

READ MORE: Busiest Deliveroo riders in line for £10,000 bonuses in IPO

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: "Competition in the sector is fierce, and Deliveroo competes with Uber Eats, Just Eat and a host of others.

"Profitability can be tough and margins tend to be slim thanks to competition and high variable costs. But the potential is there for strong returns if the logistics can be performed well and a company can establish itself as a fixture of the industry."

Deliveroo has raised over $1.7bn in the private market from backers including Amazon (AMZN) and was valued at $7bn in a recent funding round. The company had revenues of over £770m in 2019.

Watch: Deliveroo plans $7bn London share listing