Food delivery startup Deliveroo decided to price its initial public offering (IPO) at the bottom of the range, which gives the U.K. company a £7.6 billion ($10.5 billion) valuation, the Wall Street Journal (WSJ) reported on Tuesday (March 30).
Shares will be offered at £3.90 each; the original range high was £4.60. This change aligns with Deliveroo’s announcement that the price would be at the lower end of what investors anticipated. Shares begin trading Wednesday (March 31) on the London Stock Exchange (LSE) under the ticker ROO.
The delivery startup will issue shares totaling roughly £1 billion. Amazon and other existing investors will sell off part of their stakes as part of the IPO. A company spokesperson told the WSJ that 30 percent of the deal was composed of three core investors.
Deliveroo’s European public offering is on track to be one of the biggest on the continent in 2021, despite its rocky path to an IPO. For example, a few institutional investors had expressed a disinterest in the buy due to the outcome of Uber’s legal issues.
After losing in court, Uber agreed to pay its drivers in the U.K. a minimum wage and offer paid time off like vacation benefits. Some analysts have cautioned that Deliveroo could be dealt the same fate.
Deliveroo, for its part, said the lower opening share prices had nothing to do with Uber and everything to do with the current climate. About 50 percent of tech public offerings in the bigger regional markets — U.S., the Middle East, Europe, Africa — set prices in the third bottom of ranges.
The increased distribution of vaccinations combined with larger populations of the world already being vaccinated has led to an easing of lockdowns and restrictions. Restaurant dining limits across the U.K. are expected to ease April 12 to allow for outdoor seating.
Despite the price drop for its IPO, some investors are still past’s hot
sing on Deliveroo, fearful over workers’ rights taking precedence. Another investment concern has to do with the 50 percent voting rights of the company’s chief executive officer Will Shu.
But the bigger issue is workers’ rights: a survey of more than 300 Deliveroo drivers revealed that hourly pay rates are as low as £2 ($2.76). The company can sidestep minimum wage laws since it considers its drivers independent contractors. A strike is expected to happen on April 7, the day of the company’s originally-scheduled public offering.