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Amazon Stands to Win Big on Deliveroo's IPO

Aurelien Morissard | IP3 | Getty Images
  • Deliveroo's IPO will value the company between £7.6 billion and £8.8 billion, which is higher than previous reports had suggested.
  • The biggest individual winner will be Deliveroo CEO Will Shu.
  • Overall, however, Amazon stands to gain the most from the IPO.

LONDON — Deliveroo is planning to raise £1 billion ($1.38 billion) in its initial public offering next month when it is expected to debut on the London Stock Exchange.

The food delivery service plans to offer up to 256,456,256 new shares at £3.90 to £4.60 per share, according to the company's prospectus, which was published Tuesday. Existing shareholders are also planning to sell up to 128,205,128 shares.

The IPO will value the company between £7.6 billion and £8.8 billion, which is higher than previous reports had suggested. Even at the lower end of the range, Deliveroo will still be the largest tech IPO in Europe so far this year and the largest in Britain for a decade.

Deliveroo's IPO is set to make the company's top shareholders hundreds of millions. Some of them will offload some shares in the IPO but investors are planning to keep hold of most of them.

The biggest individual winner will be Deliveroo CEO Will Shu. He owns 90,570,400 shares, or 6.1% of share capital. Following the IPO, he will own 115,227,441 shares, or 6.3% of share capital. He will also have over 50% of the voting rights.

Assuming Deliveroo prices at £4.25 per share, the midpoint of the range, Shu's stake will be worth around £490 million after the IPO. It could, however, climb as high as £530 million if the pricing is at the top end of the range.

Overall, Amazon stands to gain the most from the IPO. The tech giant will hold an 11.5% stake (209,720,160 shares) in Deliveroo after the IPO that will be worth around £1 billion depending on the pricing. It currently holds a 15.8% slice but it plans to sell 23,302,240 shares for anywhere between £90.8 million and £107.2 million, depending on pricing.

Meanwhile, Index Ventures, which has also backed Facebook and Slack, currently holds 150,889,000 shares, or 10.2% share capital. If Deliveroo prices at the mid-range then its stake will be worth £641 million at the time of the IPO.

Meanwhile, DST Global, which has also backed U.K. fintech Checkout, currently holds 148,676,600 shares, or 10.1% share capital. If Deliveroo prices at the mid-range then its stake will be worth £632 million at the time of the IPO.

Both Index and DST Global are planning to sell around 15 million shares for roughly £60 million.

Other VCs set to win big include Greenoaks, T. Rowe and Fidelity, who hold between 100 million and 150 million shares each. Their stakes will be worth around £500 million to £600 million each at the time of the IPO, depending on the pricing. Meanwhile, Bridgepoint and Accel hold stakes that will be worth almost £350 million if pricing is at the mid-range.

Deliveroo's listing will take place on April 7. The stock ticker is currently unknown but options include "ROO" and "DROO."

The company's prospectus shows that Deliveroo's revenue was up 54% in 2020, while gross margin was up from 24% to 30%. However, Deliveroo still posted a full-year loss of £224 million.  

It comes after U.S. rival DoorDash was valued at $60 billion in an IPO on the New York Stock Exchange in December. Meanwhile, Grubhub was valued at just $5 billion when it went public in 2016.

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