Deliveroo IPO could cause indigestion for investors
Is a firm that has failed to turn a profit – even during the lockdown takeaway boom – worth investing in?
Takeaway-delivery platform Deliveroo is set to be “the biggest London stockmarket debut since Glencore almost a decade ago”, say Mark Sweney and Sarah Butler in The Guardian. It has priced its initial public offering (IPO) “at between £3.90 and £4.60 a share”. This would value the company at up to £8.8bn, about £1bn more than initially expected. At the top end of the proposed price range, Deliveroo would be worth more than Premier Inn and Beefeater owner Whitbread (£6.6bn) and luxury goods group Burberry (£8.2bn).
Deliveroo’s “lofty target” isn’t bad for a company valued at only £5bn as recently as January, says Ben Marlow in The Daily Telegraph. But is a firm that has “wolfed down £1.3bn of private capital since 2013” without any sign of turning a profit – not even during the lockdown takeaway boom – worth investing in? In a few weeks’ time when pubs and restaurants are full and takeaway orders are falling, the shares “might not seem so appetising”.
Still, while prospective investors may get indigestion, those who previously invested in the company will do well, says Alistair Osborne in The Times. Of the £1.6bn the company will raise from the flotation, only £1bn will go to the firm itself.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Founder Will Shu will keep most of his shares, but is planning to “wolf down £28m straight away” with a sale, while hanging on to his class-B shares will give him 58% of the voting rights, thus “bullet-proofing Deliveroo from takeover and [himself] from the sack”.
-
Lifetime ISA reform: Retirement option could be scrapped in overhaulA consultation on a product replacing the Lifetime ISA is set to be launched this year, and the option to use it to save for retirement is expected to be axed in the shake-up
-
HMRC stamp duty crackdown sees probes of property deals jump 88% – what to watch out forFrom bogus stamp duty refund claims to misleading the taxman about who owns a property, HMRC is increasing its scrutiny of stamp duty land tax reporting. Here’s how.
-
Three promising emerging-market stocks to diversify your portfolioOpinion Omar Negyal, portfolio manager, JPMorgan Global Emerging Markets Income Trust, highlights three emerging-market stocks where he’d put his money
-
Coface offers excess profit in an unloved sectorCoface is a world leader in trade-credit insurance with key competitive advantages in a niche market
-
Exciting opportunities in biotechBiotech firms should profit from the ‘patent cliff’, which will force big pharmaceutical companies to innovate or make acquisitions
-
How to invest in the new breed of payment providersUpstart payment providers are taking the world by storm. It’s time for investors to buy in, says Rupert Hargreaves
-
What turns a stock market crash into a financial crisis?Opinion Professor Linda Yueh's popular book on major stock market crashes misses key lessons, says Max King
-
How to add cryptocurrency to your portfolioA new listing shows how bitcoin might add value to a portfolio if cryptocurrency keeps gaining acceptance, says Cris Sholto Heaton
-
Profit from pest control with Rentokil InitialRentokil Initial is set for global expansion and offers strong sales growth
-
Three funds to buy for capital growth and global incomeOpinion Three investment trusts with potential for capital growth, selected by Adam Norris, co-portfolio manager of the CT Global Managed Portfolio Trust
