The instability of the market in the technology sector, especially in the United States and the United Kingdom, and the doubts of some investors about the labor model of Deliveroo, have caused the British company to go public on Wednesday with a lower price than expected. And although the pandemic has been a blow to many businesses, there are companies, such as Deliveroo, that have benefited from the restrictions. In your case, the fact that restaurants in the UK have been closed for weeks due to third confinement in one year but with permission to offer food at home, it has allowed to keep many catering companies afloat and at the same time democratize the use of this platform by users, confined to their homes.
In a statement, the company, founded in 2013, explained that although it expected its value to be up to 8.8 billion pounds, it ultimately it will range between 7.6 and 7.85 billion pounds, with a price range of between 3.90 and 4.10 pounds sterling per share, and not between the 3.90 and 4.60 pounds originally anticipated. A spokesperson indicated that “Deliveroo has received a great demand from institutions around the world and the operation will be covered several times with this price range” and detailed that the operation is “led by three very relevant key investors.” In addition, «Given the volatility of global market conditions for IPOs, Deliveroo is choosing a responsible price within the initial range and at an entry point that maximizes long-term value for our new institutional and retail investors.
And although this could become the largest IPO in the UK in the last decade, a necessary boost for the City of London after being ousted by Amsterdam as the main European stock exchange, The truth is that some investors have expressed their concerns about the company’s model, which targets the rights of workers, as happened recently with Uber, as well as doubts about its regulation. Deliveroo’s cyclists, some 100,000 in 800 cities around the world, are self-employed who earn on commission, which means they do not have a minimum wage paid by the company or the right to paid holidays or sick leave. If, as happened with Uber, it occurred a change in legislation In this sense, that would pose a risk to investors, something that could happen if the lawsuit against them against the Union of Independent Workers, which claims that some delivery men in the north of England are earning wages as low as two pounds an hour, .
Another concern is the proposed action structure, which will allow the co-founder and CEO, William ShuIn practice, have control of the company by having 20 votes per share and not just one like the other investors. Some heavyweights that were left out are Aberdeen Standard Life, Aviva, Legal & General Investment Management and M&G. On the other hand, there are those wonder if Deliveroo’s growth can be sustained once the restaurants open their doors.
This week, Finance Minister Rishi Sunak called the company’s foray into the stock market as a “True British technology success story”He said he hopes this sets the stage for more fast-growing tech companies’ IPOs.