Deliveroo, the Amazon (NASDAQ:AMZN) backed U.K. food delivery company, announced on Monday it will price its initial public offering in a range of $5.39 to $6.35 per share. If it goes public at that price range, it would value the company at nearly $12 billion.
Founded in 2013, Deliveroo announced it would go public on the London Stock Exchange with a time-limited, dual-class share structure that will ensure founder and CEO Will Shu retains a large role in moving the company forward.
“We are proud to be listing in London, the city where Deliveroo started. 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. This will help us in our mission to become the definitive food company. 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 in the “announcement of price range.”
In the document, Deliveroo said in the January-February time frame, the gross total value (GTV) of transactions on its platform increased 121% year-over-year from the same time frame in 2020. In the U.K. and Ireland, GTV grew 130%, while it increased 112% in other markets.
In its registration document filed earlier this month, Deliveroo reported Q4 GTV growth of 64% in 2020 and a Q4 2020 run rate of $6.9 billion. Underlying gross profit margin as a percentage of GTV grew from 5.8% in 2018 to 8.8% in 2020, it said.
The company will offer 384,615,384 shares. New shares offered will net Deliveroo approximately $1.3 billion. The cash influx will be used to continue expansion. Deliveroo noted that just one meal transaction a week out of 21 takes place online, representing growth potential if it can change habits.
The IPO is open to institutional investors outside the United States, it said. It will also include a “community offer” that allows U.K.-based consumers with a Deliveroo account that have placed at least one order or are a resident of the United Kingdom to buy shares.
Read: From near bankruptcy to IPO, Deliveroo set to go public
Deliveroo and selling shareholders have agreed to a 180-day lockup during which they won’t be able to sell shares, and existing directors will have a 365-day lockup.
Goldman Sachs International and J.P. Morgan Securities plc will serve as joint global coordinators, and Merrill Lynch International, Citigroup Global Markets Limited, Jefferies International Limited and Numis Securities Limited are joint bookrunners for the offer.
In May 2019, Amazon announced it would lead a $575 million Series G round that included mutual fund giants Fidelity and T. Rowe Price, as well as Greenoaks Capital. The round brought total funding to $1.53 billion and valued the company at approximately $7 billion.
But U.K. regulators put a hold on that funding a few months later. The country’s Competition and Markets Authority (CMA) served an initial enforcement order (IEO) to the two companies in June to clear concerns over the transaction. The IEO served two purposes – one, it immediately halted the tie-up between Amazon and Deliveroo and forced the two businesses to operate separately, and two, it bought some time for the CMA to decide if it needs to launch a formal probe.
The CMA in August 2020 gave approval for Amazon’s investment, giving the U.S.-based e-tailer a 16% stake in the company. According to CNBC, U.K. authorities had given tentative approval to the deal earlier in 2020 after concerns grew that Deliveroo might fail financially unless the deal was finalized.
Deliveroo plans to expand its Editions ghost kitchens concept in 2021, as well as expand on-demand grocery delivery and its Plus and Signature services, which allow customers easier access to online ordering and delivering through restaurants’ own websites.
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