Deliveroo IPO: Everything you need to know about Deliveroo

Deliveroo held the largest London-based floatation in ten years. Despite being one of the most highly anticipated IPOs the listing failed to live up to expectations. Discover everything you need to know about the Deliveroo and its IPO.

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When was Deliveroo’s IPO?

Deliveroo held it’s IPO on March 31 2021, listing on the London Stock Exchange under the ticker ROO. Unconditional trading on the secondary market isn’t due until April 7 2021.

Deliveroo is selling over 384 million shares, which is an offer size of approximately £1.5 billion. Of that, £1 billion will go to the company itself and £500 million will go to existing shareholders – including founder Will Shu, who will retain 6.3% of shares and 57.5% of voting rights.

It’s worth noting that Deliveroo’s shares have been structured in what is known as a ‘dual-class’ to give Shu this control – where some shares carry more voting rights than others. While this is common practice among US companies, it’s unusual in the UK, especially as it means Deliveroo won’t be able to join the FTSE 100 for at least three years.

Read about more potential IPOs in 2021 here. 

Deliveroo IPO valuation: How much are Deliveroo shares worth?

Deliveroo’s IPO had an estimated market capitalisation of more than £7.9 billion, after the company priced its shares at £3.90 each.

However, when conditional trading started on March 31, the company’s share price fell to around £2.73, wiping approximately £2 billion off the company’s valuation. In theory, Deliveroo could still cancel unconditional trading, which is due to start on April 7.

Deliveroo’s IPO was set to be the biggest floatation since Glencore in 2011 and was even backed by Amazon. The initial reception by markets will now go down as one of the biggest disappointments, although one that is eerily similar to Glencore’s first few days trading.

Both Deliveroo and Glencore had an icy reception by investors due to controversies in their Environmental, Social and Governance standpoints. Deliveroo’s treatment of its couriers was a definite contributor to the 30% decline in value. Plus, the value of companies such as Just Eat and Deliveroo rose in 2020 due to increased demand during pandemic lockdowns, but market speculators will be concerned about takeaway demand returning to more normal levels once restrictions are lifted and consumers have more choice over their dining habits. 

How to trade Deliveroo shares

You can trade Deliveroo shares with City Index via CFDs, which means you can speculate on whether ROO shares are rising or falling in value. Just follow these four easy steps to get started:

  1. Open a City Index account, or log-in if you’re already a customer
  2. Search for ‘Deliveroo’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade

Or, find out more about trading stocks and shares.

What is Deliveroo?

Deliveroo is a London-based online food delivery company that delivers to homes and other premises on behalf of its food outlet clients. Deliveroo customers use the company app to order and pay, with the order being picked up and prepared by the participating food outlet and sent to the customer via Deliveroo-contracted drivers.

As of February 2021, Deliveroo operates in 13 countries and 800 towns and cities, works with some 140,000 restaurants and showed a revenue for 2019 of some £476 million.

How does Deliveroo make money?

Deliveroo makes money by charging a commission fee to participating food outlets of between 25 and 35%, with customers being charged a per-order fee.

The company also has in place a subscription plan called Deliveroo Plus, which offers a variety of services such as free delivery on orders above $18 and an array of discounts and special offers. 

Additionally, the company runs a product called Editions, also known as ‘dark kitchens’, which identifies underserved food locations and partners with restauranteurs to provide a community-tailored suite of restaurants.

Is Deliveroo profitable?

Deliveroo has said it has reached operational profitability as of 2020, claiming profits in 11 of the markets in which it operates, although official figures are yet to be released for the period. The reported shift came after suffering losses of more than £300 million in 2019 and £232 million in 2018.

As 2020’s coronavirus epidemic and subsequent lockdown took hold, customers were unable to enjoy restaurant food on-premises, opting for takeaway instead. Founder Will Shu has said that this translated to more sign-ups and orders, and higher average order values.

Who are Deliveroo’s competitors?

Deliveroo’s competitors include Just Eat, Delivery Hero, and the relative newcomer UberEats.

Berlin-based Delivery Hero was established by Niklas Östberg in 2011 and posted revenues of €1.5 billion in 2019, more than doubling its sales from the prior year. Today, the country operates in more than 40 countries and partners with some 500,000 restaurants. Meanwhile, Just Eat, which merged with Takeaway.com in 2019 and bought US operator GrubHub in 2020, posted revenues of close to £1 billion in 2019.

The share prices of Delivery Hero and Just Eat rose spectacularly in 2020 as coronavirus drove demand through hungry prisoners of lockdown. However, 2021 has seen the competitors’ share price fall as Just Eat and Delivery Hero both saw slumps in the first quarter of the year.   

What is Deliveroo’s strategy?

Deliveroo’s strategy as of 2019 developed from a ‘functional’ approach to a focus on delivering ‘food happiness’ to its customers, a philosophy grounded in the takeaway experience representing a moment of joy. The new approach was marked by its global brand campaign to ‘Eat more amazing’, targeting ‘switchers’ from rivals.

The company’s current focus, as defined by the company’s UK and Ireland marketing director Emily Kraftman, is to be more ‘consumer determined’, increasing accessibility to an older demographic as well as widening its appeal outside of major cities.

Chief technical officer Mike Hudack has stated the broader aim at the company is simply to ‘become the best food company in the world’ and ‘establish a brand that represents for food what Spotify is for music’.

Who are the directors of Deliveroo?

Deliveroo was founded by American-born banking analyst Will Shu and computer programmer Greg Orlowski in 2013. Shu remains CEO of the company, while Orlowski resigned from his position as chief technology officer in 2016. There are a number of prominent board members and advisors, including Index Ventures partner Martin Mignot.

Here are some of the key personnel and their positions in the company.

Position

Name

Co-Founder and CEO

Will Shu

Chief Operating Officer

Rohan Pradhan

Head of Operations

Quirin Dalemans

Director of Global Sales Strategy

Mathilda Nathan

Director of Engineering

Rahma Javed

Chief Technical Officer

Mike Hudack

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