(Adds further background)
By Rachel Armstrong and Abhinav Ramnarayan
LONDON, March 22 (Reuters) - Food delivery company Deliveroo
could make Britain’s biggest stock market debut since
commodities giant Glencore went public nearly a decade
ago, after setting a price range on Monday that values it at up
to $12 billion.
The Amazon-backed food delivery firm has been held
up by the British government as a sign the City of London can
still attract major Initial Public Offerings (IPO) following the
United Kingdom's exit from the European Union.
It is set to be London's biggest IPO since Glencore in May
2011, according to data provided by the London Stock Exchange.
A London stock market listing by Allied Irish Banks in 2017
is excluded from the data as it had a small listing in Ireland
at the time.
Deliveroo will also be the biggest tech IPO on the LSE,
dwarfing The Hut Group from last year -- which had a 5.4
billion pound market capitalisation at time of listing -- and
the since-delisted Worldpay Group from 2015.
The company has benefited from the closure of restaurants
for anything other than takeaways during the COVID-19 crisis and
revenues have soared accordingly, with so-called gross
transaction value - which measures the total value of orders
received - rising 64.3% in 2020 to 4.1 billion pounds.
But it faces questions on whether that momentum will
continue after COVID-19 restrictions are eased and be enough to
turn the business towards profit after it posted an underlying
loss of 223.7 million pounds ($308.93 million) last year.
"Deliveroo has clearly had a Covid boost," said Susannah
Streeter, senior investment and markets analyst at Hargreaves
Lansdown.
"Although this insatiable demand for takeout food isn't
likely to fully unravel, there is inevitably going to be a drop
in demand as diners seize the opportunity to book tables at
their favourite eateries when restrictions do ease."
PRICE RANGE
Deliveroo said it had set a price range for its listing of
between 3.90 and 4.60 pounds per share which will give it a
market value of between 7.6 billion pounds and 8.8 billion
pounds ($10-5 billion and $12 billion), excluding any shares
offered as part of an over-allotment issue.
An announcement to investors seen by Reuters said that the
deal size would be 1.5-1.6 billion pounds, rising to 1.7 billion
pounds after the over-allotment of shares.
Of this, new shares will raise 1 billion pounds for the
company and the rest will be made up by existing shareholders
selling part of their stake.
Deliveroo has opted not to pursue a premium listing --
ruling it out of inclusion in the FTSE indices -- which allows
founder and chief executive Will Shu to retain enhanced
shareholder rights.
In a short trading update, Deliveroo added that the total
gross transaction value on its platform was up 121% in January
and February this year compared to the same period in 2020.
"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 a statement.
JP Morgan and Goldman Sachs are global
coordinators and bookrunners along with Bank of America,
Citi, Jefferies and Numis.
($1 = 0.7214 pounds)
(Reporting by Rachel Armstrong and Abhinav Ramnarayan;
Editing by Emelia Sithole-Matarise and Kirsten Donovan)
Glencore (GLEN)