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Amazon-backed Deliveroo seeks valuation of up to $12 billion in its London IPO

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The Deliveroo app displayed on a smartphone screen.

Thiago Prudencio | SOPA Images | LightRocket via Getty Images

LONDON — British food delivery firm Deliveroo is seeking a valuation of up to GBP8.8 billion ($12.2 billion) in its upcoming initial public offering in London.

The company, which is backed by Amazon, set a price range of between GBP3.90 and GBP4.60 per share for its blockbuster IPO, implying an estimated market cap of between GBP7.6 billion and GBP8.8 billion.

Deliveroo’s market debut is set to be one of the biggest U.K. listings in years. The company announced plans to IPO in London earlier this month, giving the U.K. capital a big win after Brexit as it aims to lure more high-growth tech companies.

A government-backed review urged reforms to London’s listing regime, including the ability to list dual-class shares like those pioneered by the likes of Google and Facebook. Currently, firms are unable to do so on the premium segment of London’s stock market, which prevents them from being eligible for inclusion in benchmarks like the FTSE 100.

Deliveroo has opted for a dual-class share structure that gives CEO and founder Will Shu enhanced voting rights. Shu will get 20 votes per share while other investors are entitled to only one. Deliveroo hopes to raise gross proceeds of GBP1 billion from its IPO.

“We are proud to be listing in London, the city where Deliveroo started,” Shu said in a statement Monday.

“Becoming a public company will enable us to continue to invest in innovation, developing new tech tools to support restaurants and grocers, providing riders with more work and extending choice for consumers, bringing them the food they love from more restaurants than ever before.”

Deliveroo says it will use the IPO proceeds to enhance its platform and push deeper into on-demand grocery deliveries, which have benefited heavily from the coronavirus pandemic.

In a trading update Monday, Deliveroo said the total value of transactions it processes more than doubled in the first two months of the year, getting a boost from the U.K.’s coronavirus lockdown. Volumes grew by 130% year-on-year in the U.K. and Ireland while other markets grew 112%.

Deliveroo went from near failure in 2020 amid a competition review into Amazon’s minority investment in the firm, to operating profitability toward the end of the year thanks to the pandemic-driven surge in demand for online takeout apps.

“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,” said Shu.

Deliveroo has earmarked GBP50 million worth of shares to be offered to its customers. The firm is promoting the offering in a large banner ad near the top of its app. It comes as retail traders have been piling into the stock market in recent months, a phenomenon that led to huge fluctuations in the prices of heavily-shorted stocks like GameStop and AMC.

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