Deliveroo picks banks to serve up blockbuster float

Business

Deliveroo has hired a quartet of investment banks to help it serve up what could be London’s biggest stock market flotation of 2021.

Sky News has learnt that the restaurant and grocery delivery app has appointed Bank of America Merrill Lynch, Citi, Jefferies and Numis to work on listing that market sources expect to value it at well over £5bn.

The four investment banks will work underneath Goldman Sachs and JP Morgan on Deliveroo‘s initial public offering (IPO), which is expected to be launched in or around April.

Sources said the surge in revenues that Deliveroo had seen since the start of the coronavirus pandemic was likely to prompt a sharp upward revision in its advisers’ expectations of the valuation it could now achieve.

Based on publicly traded competitors in the US such as DoorDash, bankers are said to be preparing to pitch a valuation of well over £5bn and potentially as much as £8bn, according to market sources.

Earlier this week, Deliveroo announced plans to expand into a further 100 towns and cities across the UK, enabling it to reach an additional four million people.

Founded by Will Shu in 2013, the company has been assembling the building blocks for what will be one of the City’s most prominent debuts of the year.

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It recently appointed Claudia Arney, a former Premier League and Ocado director, as its chair, and is expected to add more independent directors ahead of its IPO.

If it goes ahead, the float will come after Lord Hill, the former EU commissioner, completes a review of London’s listings regime with the objective of attracting high-growth technology companies to the City.

The Amazon-backed company is one of Britain’s best-known technology ‘unicorns’ – companies worth at least $1bn.

Amazon’s investment – following a lengthy competition inquiry – as part of a $575m fundraising has prompted Deliveroo to turn its attention towards further innovation in the fight against rivals Uber Eats and Just Eat Takeaway.com.

A bumper flotation will provide liquidity to many of Deliveroo’s longest-standing shareholders, with notable names on its investor register including the private equity firm Bridgepoint and the institutional investors Fidelity and T Rowe Price.

Deliveroo now has around 45,000 restaurants on its platform in the UK, and it has recently started allowing customers to reward riders after their delivery has arrived.

It has also announced the launch of a service called Brought To You By Deliveroo, which will allow customers to order food from restaurants’ websites, but with the tech company fulfilling the orders’ delivery.

Deliveroo’s brighter prospects come amid a torrid period for many of its restaurant partners, with hospitality chiefs warning that hundreds of thousands of jobs will disappear from the sector without further state support.

Deliveroo declined to comment on the appointment of the four banks.

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