The listing is set to be London’s biggest IPO since Glencore in May 2011 and also the biggest tech float on the London Stock Exchange, dwarfing The Hut Group last year.
Banks working on the deal said on Monday that order books were covered throughout the price range, showing that investor demand had exceeded the full deal size.
Deliveroo, due to make its debut on March 31, narrowed its price range on Monday to between 3.90 and 4.10 pounds per share, indicating a valuation of between 7.6 billion pounds and 7.85 billion pounds ($10.48 billion – $10.82 billion), excluding shares offered as part of an over-allotment issue.
The company, founded by boss William Shu in 2013, opted against pricing the deal at the top of the original price range of between 3.90 and 4.60 pounds – which would have given it a market value of up to 8.8 billion pounds – citing market volatility.
“Deliveroo has received very significant demand from institutions across the globe. The deal is covered multiple times throughout the range, led by three highly respected anchor investors,” a company spokesperson said.
“Given volatile global market conditions for IPOs, Deliveroo is 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.”
A source familiar with the listing said the company had taken a “responsible” approach given the performance of some recent IPO deals, such as U.S. cloud computing firm DigitalOcean and British online reviews platform Trustpilot, which were both trading below their IPO price.
Deliveroo has benefited from lockdown demand for takeaway food during the COVID-19 crisis when restaurants across Europe were forced to shut down.
Its revenues have soared and its so-called gross transaction value – a measure of the total value of orders received – jumped 64.3% in 2020 to 4.1 billion pounds.
Yet, despite bumper investor demand some British institutional investors are not comfortable with the company’s decision not to pursue a premium listing. This allows its CEO Shu to retain enhanced shareholder rights but means the company will not join the FTSE indices.
UK fund manager Legal & General Investment Management said last week it was unlikely to participate in the IPO.
“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.
Deliveroo’s order book has so far attracted strong interest from U.S. investors, the source familiar with the IPO said, which have more experience with the dual-class share structures and the dynamics of tech listings.
JPMorgan and Goldman Sachs are acting as joint global coordinators on the deal while Bank of America, Citigroup, Jefferies and Numis are the joint bookrunners.