Deliveroo eyes $10.5 billion listing after some funds steer clear

(Reuters) – Deliveroo will price its initial public offering at 390 pence per share, banks working on the deal said on Tuesday, at the bottom end of previously indicated valuations for the food delivery group.

That would indicate a valuation of 7.6 billion pounds ($10.46 billion), less than expected, after a string of major UK fund managers said they would not take part in the deal, citing concerns about its dual class share structure and its gig economy business model.

The listing is covered multiple times over, the bookrunners said, with the deal expected to close at 1200 GMT.

The listing of London-based company, founded by boss William Shu in 2013, is set to be London’s biggest IPO since Glencore’s in May 2011 and also the biggest tech float on the London Stock Exchange.

Heavyweight investors Aberdeen Standard Life, Aviva, Legal & General Investment Management and M&G have all said they will sit the deal out, amid criticism of its workers’ rights.

Some of them also question whether the loss-making business can ever justify its valuation.

Having initially looked for up to 8.8 billion pounds, the British tech firm on Monday went with a narrower price range, indicating a maximum valuation of up to 7.85 billion pounds.

Deliveroo’s self-employed drivers have seen a boom in demand during the COVID-19 pandemic, bringing food from otherwise-shuttered restaurants to housebound customers.

($1 = 0.7266 pounds)

Deliveroo flotation price to be at bottom of target range

Food delivery business Deliveroo has said it will price shares for its stock market listing towards the bottom of its planned range.

Deliveroo now expects to be valued at between £7.6bn and £7.85bn, whereas its original price range had indicated it could be valued at up to £8.8bn.

It said it had chosen the lower price due to “volatile” market conditions.

Last week, a number of fund managers said they would reject the listing amid concerns over workers’ rights.

‘Significant demand’

Deliveroo’s planned share sale has attracted much attention as it could be the UK’s biggest flotation for a decade.

Last week, the company it estimated a price range of between £3.90 and £4.60 per share for the float on Wednesday.

However, on Monday it trimmed the price range to between £3.90 and £4.10 per share.

In a statement, it said: “Deliveroo has received very significant demand from institutions across the globe.”

It added that the deal is covered multiple times throughout the range, “led by three highly respected anchor investors”.

Deliveroo's chief executive Will Shu
image captionDeliveroo’s chief executive, Will Shu, founded the business in 2013

But referring to “volatile global market conditions for IPOs”, Deliveroo said it was “choosing to price responsibly within the initial range and at an entry point that maximises long-term value for our new institutional and retail investors.”

The move comes after a number of US tech stocks fell below their issue prices after IPOs in recent weeks.

Fund worries

Despite the size of Deliveroo’s flotation, last week a number of leading fund managers said they would reject the listing.

Managers such as Legal & General, Aviva, Aberdeen Standard and M&G expressed concerns over workers’ rights, the company’s business model and regulatory concerns.

Rupert Krefting, head of corporate finance and stewardship at M&G, said the company’s reliance on gig-economy workers made it a risk for investors.

Deliveroo riders are self-employed, meaning they are not entitled to earn a minimum wage from the company, or holiday and sick pay.

David Cumming, chief investment officer at Aviva, warned of the risk that drivers will have to be reclassified as workers, which would entitle them to rights such as sick and holiday pay. “It’s an investment risk if the legislation changes,” he said.

One backer of takeaway delivery platforms is James Anderson, manager of the UK’s largest investment trust Scottish Mortgage.

He told The Times that he was “lukewarm” about Deliveroo because of its focus on slower-growing markets and its over-reliance on London.

“I think their model is successful in the unusual economics of London and it’s much more difficult to spread elsewhere,” he said.

Investment firms have also raised concerns over the proposed share structure, which will see founder Will Shu have 20 votes per share, compared with one per share for other investors, giving him a majority position in shareholder votes.

Deliveroo, which was founded in 2013, has said it will hand its riders bonuses of between £200 and £10,000 when it floats, depending on the number of orders they have delivered.

Trade union calls for Deliveroo UK riders strike to highlight IPO risks

LONDON (Reuters) – A trade union called for Deliveroo’s UK riders to strike when the meal delivery service floats on the stock market next month, saying on Sunday the action would highlight dissatisfaction with the company’s business model and approach to workers’ rights.

Deliveroo, whose turquoise-uniformed couriers delivering chicken kormas and American hot pizzas are a common sight in many British suburbs, is set for Britain’s biggest stock market debut in nearly a decade after setting a share price range that values it at up to $12 billion.

But some investment firms have said they will not participate in the initial public offering (IPO). Insurer Aviva for instance highlighted a lack of rights for riders as an investment risk as the company might be forced to change its business model.

Deliveroo said investor demand had continued to build since its roadshow began on Monday, and said the views of the union which announced the strike, the Independent Workers’ Union of Great Britain (IWGB), did not represent the vast majority of riders.

The IWGB previously lost a legal challenge to Deliveroo in 2018. The case sought to secure rights such as the UK minimum wage for riders, but the court ruled riders were self-employed.

“Investing in Deliveroo means associating yourself with the exploitative and unstable business model,” IWGB President Alex Marshall said in a statement, adding the strike was planned for April 7, to coincide with the IPO.

The rights of people who work in the so-called “gig economy” have been an increasing focus in Britain. Ride-hailing app Uber gave its workers more entitlements earlier this month after losing a Supreme Court case.

Deliveroo said job satisfaction levels among its 50,000 self-employed riders in Britain was at an all-time high, and that the flexibility they had was a big attraction.

“Thousands apply to work with us every week, reflecting the strong demand for our on-demand model,” a company spokeswoman said.

Investment risks: Deliveroo loses top investors

Six big UK investment firms say they will not buy Deliveroo shares after concerns over workers’ rights.

The delivery company hopes to be valued at up to £8.8bn when it lists its shares in April.

But Aberdeen Standard, Aviva Investors, BMO Global, CCLA, LGIM and M&G said they were put off by factors including the working conditions of its riders and lack of investor power.

Deliveroo said it had seen “significant demand” for stock with interest rising.

“We look forward to welcoming new shareholders next week alongside our currently highly respected existing investors,” it added.

Deliveroo riders are self-employed, meaning they are not entitled to earn a minimum wage from the company, or holiday and sick pay.

‘Time bomb’

Rupert Krefting, head of corporate finance and stewardship at M&G, said the company’s reliance on gig-economy workers made it a risk for investors.

He pointed out that Uber had recently had greater legal rights enforced by the Supreme Court for drivers previously categorised as self-employed.

“Deliveroo’s narrow profit margins could be at risk if it is required to change its rider benefits to catch up with peers,” Mr Krefting added.

Legal & General Investment Management (LGIM) said it was put off by an “unequal voting rights” structure.

Deliveroo is planning to let its founder and chief executive Will Shu have more than 50% of shareholder voting rights.

“It is important to protect minority and end-investors against potential poor management behaviour, that could lead to value destruction and avoidable investor loss,” LGIM said.

Phil Webster, a portfolio manager at BMO, said labour issues represented a “ticking bomb on the side” for Deliveroo, which contributed to making it “uninvestable”.

Andrew Millington, head of UK Equities at Aberdeen Standard, told the BBC’s Today programme that the conditions were a “red flag”, adding: “We wouldn’t be comfortable that the way in which its workforce is employed is sustainable.”

He compared Aberdeen Standard’s recent decision to sell off Boohoo shares, following allegations of worker exploitation at suppliers to the online clothing company.

Large institutional investors such as Aberdeen Standard can use their financial muscle to try to influence the way firms are run – such as through relationships with managers and shareholder votes.

But Mr Millington said that sometimes “disinvesting or not investing in the first place is our only option”.

He added that it would be interesting to see whether Deliveroo can attract investors over the longer term “without making progress” on worker rights.

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Analysis box by Dominic O'Connell, business correspondent

One of the biggest-ever floats on the London market of a home-grown technology company should have meant a feeding frenzy among the City’s institutional investors, the companies that have the job of putting trillions of pounds of retail and pension investors money to work. 

For years they have watched with envy as their US counterparts have put cash into a steady stream of technology companies.

Not all have been big hits after listing their shares on public markets, but enough of them have been – think Apple, Alphabet, Amazon, Tesla and a string of others – to have made it a big source of investment returns. Deliveroo’s listing, which could value the company at just short of £9bn, should have been a rare similar opportunity on the London market.

Instead some big players, including Aviva Investors and Aberdeen Standard, are turning their backs, saying the way the company employs its riders is not socially acceptable, and poses a risk to its future.

Deliveroo deems its riders to be self-employed, and points out that the High Court has upheld that view. What is more, Deliveroo says its riders value the flexibility that employment status gives them, although it is worth noting that Uber maintained the same thing until it eventually decided its drivers were in fact workers, not self-employed contractors.

There is no danger to Deliveroo’s float – there are enough investors around who are happy to buy the shares. The buying strike by large investors could have ramifications well beyond one company, however. Does this mean that all gig economy companies are off limits? Does it signal that all companies on the London market will now have to ensure their worldwide organisations meet the best employment standards?

Andrew Millington of Aberdeen Standard told the Today programme that would be the battle to come – that his firm would hold on to a company’s shares as long as it was moving in the right directions, and paid proper attention to employment standards. That is a subtle warning to boardrooms that they will in future be judged by the way their treat their most junior staff.

David Cumming, chief investment officer at Aviva, said investors were taking social responsibilities “a lot more seriously”.

“A lot of employers could make a massive difference to workers’ lives if they guaranteed working hours or a living wage, and how companies behave is becoming more important.”

A report by the Bureau of Investigative Journalism (BIJ) – based on thousands of invoices from 300 Deliveroo riders – claims that one in three is earning less than the National Living Wage, which is currently £8.72 an hour.

However, Deliveroo said the sample of 300 people was “not a meaningful or representative proportion” of their riders and that they can earn up to £13 an hour “at our busiest times”.

“These findings [by the BIJ] raise concerns,” said Tom Powdrill, head of stewardship at shareholder lobby group Pirc. “Investors considering taking a position in Deliveroo should familiarise themselves with these matters and the risks and responsibilities involved along with all other relevant factors.”

Investment risk

Mr Cumming also warned of the risk that drivers will have to be reclassified as workers, which would entitle them to rights such as sick and holiday pay. 

“It’s an investment risk if the legislation changes,” said Mr Cumming. 

Uber recently reclassified its drivers as workers after a landmark UK supreme court case last month.

Deliveroo's chief executive Will Shu
image captionDeliveroo’s chief executive, Will Shu, founded the business in 2013

Since losing a five-year legal battle with drivers who claimed it had wrongly classified their employment status, Uber has offered holiday pay, a guaranteed minimum wage, and pensions benefits to its drivers.

Other gig economy companies have been looking closely at the Supreme Court’s verdict in February, although it does not directly apply to Uber Eats – the food delivery arm of the business.

‘Punctured profits’

Deliveroo has set aside more than £112m to cover potential legal costs relating to the employment status of its delivery riders.

It warned potential investors of the risk of litigation around the world in documents setting out its plans for a stock market debut published on Monday.

“The European Commission is set to draw up new legislation governing how the gig economy model works across the bloc,” pointed out Susannah Streeter, an analyst at Hargreaves Lansdown.

“If Deliveroo is forced to change the way it classifies its riders in the future, it is likely to puncture its profits prospects, and could even derail the delivery giant.”

Deliveroo, which was founded in 2013, has said it will hand its riders bonuses of between £200 and £10,000 when it floats, depending on the number of orders they have delivered.

China’s Meituan reported quarterly loss as it expands into new area

BEIJING (Reuters) – Chinese food delivery company Meituan reported a loss on Friday for October-December after two consecutive quarters of profit, as it expanded into the community group-buying business that relies heavily on subsidies.

It reported a loss of 2.24 billion yuan ($343 million) versus profit of 1.46 billion yuan in the same month a year earlier, the company said in a stock exchange filing.

Meituan, whose services also include restaurant reviews and bike sharing, said total revenue rose 34.7% in October-December from a year earlier to 37.92 billion yuan ($5.80 billion). That compared with the 39.17 billion yuan average of 14 analyst estimates, IBES data from Refinitiv showed.

Community group buying, which lets communities set up groups for bulk buying, is one of Meituan’s new initiatives that grew by 51.9% year-on-year in quarterly revenue to 9.24 billion yuan.

Food delivery, which accounts for over half of Meituan’s total revenue, posted revenue growth of 37.0% to 21.54 billion yuan. Its in-store, hotel and travel operation saw revenue growth of 12.2% to 7.14 billion yuan.

($1 = 6.5417 Chinese yuan renminbi)

Uber teams up with ScriptDrop to expand prescription delivery access in U.S.

(Reuters) – Uber Technologies Inc will work with prescription delivery services provider ScriptDrop to enable customers in 37 U.S. states to receive medication at their doorstep, the ride-hailing service said in a blog post. (

Pharmacies signed up with ScriptDrop will be able to use Uber’s delivery services, which could result in fewer events of customers going without their prescriptions due to COVID-19 related limitations, the post said on Wednesday.

The partnership news comes as big tech companies are increasingly pushing into the healthcare sector. Earlier this month, Inc expanded its virtual healthcare services, after launching an online pharmacy last year.

Last August, Uber partnered with on-demand prescription delivery platform NimbleRx.

Uber will become the default application for select ScriptDrop pharmacies, depending on location and driver availability, the company said, adding that it plans to expand the services to more pharmacies in the coming weeks and months.

In Southeast Asian internet battle, Sea’s rise sends rivals scrambling

In front of an open-air Jakarta restaurant, delivery drivers clad in the orange colours of Southeast Asia tech group Sea Ltd wait for orders next to the green-jacketed riders of market leaders Gojek and Grab, in what has become the latest battleground for tech supremacy in Southeast Asia.

The humble noodles eatery signed up for Sea’s nascent ShopeeFood service a month ago, but “immediately, there were orders everyday,” said manager M.A Rasyid.

Riding on the success of a cash-generating gaming business, U.S.-listed Sea has invested heavily in its Shopee e-commerce brand and successfully taken on Alibaba’s Lazada and other rivals in recent years. Its share price has risen five-fold over the past year, giving the company a market capitalisation of $111 billion.

Now Singapore-based Sea is muscling into food delivery and financial services in Indonesia, the world’s fourth-most-populous country, posing a new threat to regional rivals including ride-hailing and delivery unicorns Grab and GoJek.

At stake is a slice of the more than 400 million internet users in Southeast Asia’s digital economy, which is estimated to triple to $309 billion by 2025, according to a study by Google, Temasek and Bain & Company.

Tech giants including Tencent, a major investor in Sea, Alibaba, Google and Softbank Group Corp are big backers of Southeast Asia’s internet champions.

Sources say Sea’s aggressive expansion is one of the key sources driving merger discussions between Gojek and e-commerce platform Tokopedia. The two Indonesian firms aim to create an $18 billion powerhouse to fight off Sea and regional ride-hailing leader Grab.

Meanwhile, Grab and other players, including travel app Traveloka and Indonesian e-commerce unicorn Bukalapak, are rushing for public listings, hoping to ride the coattails of Sea’s stock rally while defending their turf, according to Reuters interviews with over a dozen people.

“Sea is like Thanos, massive and powerful, and able to take down half of the world, or in this case half the startups,” Willson Cuaca, co-founder of East Ventures and an early backer of Tokopedia, joked as he compared the group to the powerful villain in the Marvel film series.

“Like the Avengers, companies need to band together if they want to ensure their survival and to win the war.”


Sea’s stock rally reflects a scarcity of options for investors seeking exposure to the booming Southeast Asia internet sector. It went public in 2017 and has raised some $7 billion in share and debt sales, with early investor Tencent now holding about 20% of the stock.

That investor appetite, combined with a need to raise cash to match Sea’s muscle, is forcing rivals to seek public listings as quickly as they can, bankers and executives familiar with the matter say.

Sources say the Gojek-Tokopedia merger, which is likely to be finalised within weeks, will be followed by a listing in Jakarta in the second half of 2021, then a mega IPO in the United States targeted for 2022.

Grab and Traveloka, for their part, are looking at speeding up the process by merging with special purpose acquisition companies, sources said. Bukalapak is planning the same, after a 2021 Jakarta IPO.

“The market is pretty welcoming for tech stocks. It’s an opportunity for Grab if they are ready for it,” said Jixun Foo, a managing partner at GGV Capital, which has invested in Grab.


Sea’s success owes much to its online gaming business Garena, whose 2017 title Free Fire became the most downloaded game in the world over the past two years.

It’s using the cash from Garena to repeat its success in e-commerce, food delivery and financial services.

Its Shopee division started off in 2015 as a platform for local sellers and soon gained traction with many merchants regionally. It has now overtaken both Lazada as the top e-commerce player in the region and Tokopedia as the leader in Indonesia, thanks in part to innovations such as adding social features to its service.

Both Gojek and Grab, which have pursued on-again, off-again merger talks with each other for years, believe they can ward off Sea’s move into food delivery thanks to well-honed logistics networks and early-mover advantages.

But they could be hard-pressed to match Sea’s subsidies: in Vietnam, Sea-owned food delivery service Now quietly dominates the sector, according to a January report by advisory firm Momentum Works.

In Indonesia, ShopeeFood is wooing vendors by touting its 80 million-strong user base and promising to subsidise steep discounting.

The next showdown will be in financial services.

Sea has bought Indonesian lender Bank BKE and has hired a veteran of China’s peer-to-peer platforms to head its “SeaMoney” banking efforts.

“SeaMoney can become the Ant Financial of Southeast Asia,” said Daniel Jacobs, managing partner at emerging markets hedge fund Kora, a Sea shareholder.

“After payments, they have the vision and will to grow into adjacent areas, from ‘buy now, pay later’ on the customer side to merchant credit and all sorts of financial services.”

But Gojek and Grab, both of which own part of Indonesian payment app OVO, have similar ambitions. And Sea and Grab are set to square off in Singapore, where both won coveted digital bank licences in December.

Grab is backed by many investors including SoftBank Group and Mitsubishi UFJ Financial Group.

“This is going to be a battle of the titans,” said Patrick Walujo, the co-founder of Indonesian private-equity firm Northstar Group and a Gojek investor.

FedEx profit soars with pandemic-fueled delivery demand

(Reuters) – U.S. delivery firm FedEx Corp on Thursday said quarterly profit jumped on higher prices and surging volume from pandemic-fueled home e-commerce deliveries.

Fiscal third-quarter adjusted net income at the Memphis-based company increased to $939 million, or $3.47 per share, from $371 million, or $1.41 per share, a year earlier. Revenue for the quarter ended Feb. 28 grew 23% to $17.5 billion.

Uber expands food delivery further: Sees ride demand pick up

Reuters – Uber Technologies Inc on Wednesday said revenue at its ride-hail and delivery businesses increased on a quarterly basis and said it was well on track to achieve its target for an adjusted profit by year-end.

Shares fell 2.4% in after-hours trading after gaining around 6% during the day in reaction to smaller ride-hail rival Lyft Inc saying on Tuesday it might become profitable during the third quarter, three months ahead of a previous goal.

Uber reported a loss on an adjusted basis before interest, taxes, depreciation and amortization of $454 million, significantly narrower than analysts’ average expectations for a $514 million loss, according to Refinitiv data.

Adjusted EBITDA, which excludes the cost of the company’s extensive stock-based compensation and other potentially significant items, is the profitability metric Uber uses.

Uber reported $3.17 billion in total revenue in the months from October through December.

Fourth-quarter mobility revenue, largely comprised of rides, declined by 52% from last year, but at $1.47 billion was up 8% on a quarterly basis despite new lockdown measures in the United States, Europe and the Middle East.

Lyft on Tuesday said it expected a rebound in demand in the second quarter and, in combination with further cost cuts, said it might now be able to turn a profit in the third quarter.

Orders at Uber’s food delivery platform, Uber Eats, further grew during the fourth quarter, as many countries and U.S. states issued new lockdown orders, closing restaurants and prompting many people to order in.

Delivery revenue more than tripled from last year and at around $1.36 billion, grew 19% compared with the third quarter.

Uber has expanded its footprint in the competitive space and acquired smaller food-delivery rival Postmates for $2.65 billion and alcoholic beverage delivery service Drizly for $1.1 billion.

Both deals were largely stock-based, with the Drizly deal expected to close later this year.

Uber also said it had further lowered costs in the fourth quarter, with total costs and expenses dropping 14% in that period.

Following a directive by Chief Executive Dara Khosrowshahi to focus on the company’s core businesses – rides and delivery – Uber has also slashed costs by selling adjacent units.

The company in December sold its self-driving Advanced Technologies Group (ATG) in a $4 billion equity deal at a steep drop in valuation. Khosrowshahi at the time said the deal would accelerate Uber’s profitability goal.

The same month, Uber also handed over the keys to its air taxi business Elevate, another cash-burning unit, without disclosing the terms of the deal.

Beware Christmas parcel delivery scams, banks warn

People are being warned to watch out for parcel delivery scams during the Christmas postal rush.

Criminals are looking to defraud consumers by posing as well-known delivery companies, the banking trade body UK Finance has warned.

Fraudsters have been sending emails saying they have not been able to deliver goods, and then ask for a fee to rearrange the delivery.

They then try to extract financial details which are used to commit fraud.

Customers are typically tricked into clicking on links to seemingly genuine websites requesting personal and financial information such as their address, date of birth, mobile number or bank details.

In some cases, victims receive a call from the criminal later pretending to be from their bank’s fraud team, trying to persuade them to move their money to a safe account or reveal their pass codes.

‘Stop and think’

UK Finance says the public should also be aware of an increased risk of scam phone calls and fake delivery notices posted through letterboxes. 

Fingers tapping phone
image captionFraudsters send links to seemingly genuine websites

These notices will ask for advance payment or for customers to provide information that is later used to defraud them.

“Unscrupulous criminals will stop at nothing to commit fraud and that includes exploiting the festive season to target their victims,” said Katy Worobec, managing director of economic crime at UK Finance.

“We are urging people not to give a gift to fraudsters this Christmas and to follow the advice of the Take Five to Stop Fraud campaign. Always take a moment to stop and think before parting with your information or money and avoid clicking on links in an email or text message in case it’s a scam.” 

One IT worker, who didn’t want to give his name, told the BBC he received an email earlier this month purporting to be from the delivery firm DPD. It asked him to pay £2 for re-delivery. 

He entered his bank details, but when he checked his account balance two days later he discovered a new purchase from Apple UK for £409.

“I fell for it without thinking as I have a lot of deliveries at the moment,” the IT worker said. 

The man’s bank refunded the full amount and promised to investigate the fraud.

But not all victims will be so lucky. Some banks refuse to refund money that’s been lost when victims volunteer information such as bank details, even though they’ve been duped.

UK Finance says people should watch out for mis-spelled names, or cards and communication without your name specifically on them.

If you are asked to contact the delivery firm, copy and paste any web address into a new browser, rather than clicking straight onto a link and phone numbers should be checked against the company’s own listed numbers.

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How to prevent fraud

The Take Five to Stop Fraud campaign is urging people to:

  • Stop: Taking a moment to stop and think before parting with your money or information could keep you safe
  • Challenge: Could it be fake? It is OK to reject, refuse or ignore any requests. Only criminals will try to rush or panic you
  • Protect: Contact your bank immediately if you think you’ve fallen for a scam and report it to Action Fraud