Food delivery service Deliveroo has raised more than $180m (£133m) from its existing backers as it prepares for a potential stock market flotation.
The funding round values the company at more than $7bn (£5.2bn) in a sign that investors, which includes Amazon, are confident of the growth prospects at the business as appetite from locked down consumers remained strong.
It signalled a reversal of fortunes at the business after the early shock of lost revenues as restaurants closed their doors in the early stages of the coronavirus pandemic. Last April, as the first wave of the outbreak hits its peaks, the CMA in the UK ignored competition concerns to allow Amazon’s purchase of a 16% stake in Deliveroo to go ahead as the company warned of falling sales.
Since then, the pandemic has seen the group’s services in high demand, signing partnerships with the likes of Aldi, Sainsbury’s Waitrose, Costa and Pret.
This weekend, Deliveroo confirmed, for the first time, its plans for a potential IPO and said the new cash injection reflected strong demand from its shareholders.
The group will use the money from the latest fundraising to further drive growth and enhance its services for restaurants, riders and consumers.
Will Shu, founder and CEO of Deliveroo, said: “At Deliveroo we are always focused on developing the best proposition for consumers, riders and restaurants.
”This investment will help us to continue to innovate, developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers, bringing them the food they love from more restaurants than ever before. We are really pleased our shareholders see the opportunity and growth potential ahead of us.”
Deliveroo added the investment would contribute to:
- Expanding Editions delivery-only kitchen sites globally, working with more partners
- Expanding on demand grocery, a service that has grown rapidly over the last year
- Extending our Plus subscription service, bringing this to new geographies and expanding our benefits for subscribers
- Offering its Signature service to restaurants, enabling customers to order delivery via restaurants’ own websites and increasing restaurants’ sales
- New initiatives to support riders working with the company
The $180m funding round was lead by existing shareholder Durable Capital Partners, alongside Fidelity Management & Research Company.
Henry Ellenbogen, managing partner and chief investment officer at Durable Capital Partners, said: “I have been impressed with the team’s ability to spot opportunities, innovate and adapt to changes in the market. The online food delivery market is nascent and underpenetrated. We believe Deliveroo has the potential to become a much bigger company over time.”
On a quiet start to the week on the markets, Devro, one of the world’s leading manufacturers of collagen products for the food industry, issued a trading update for the year ended 31 December 2020.
Trading in the final months of 2020 was slightly ahead of management’s expectations, driven by higher volumes and margins. As such, the expected outturn for group underlying operating profit, subject to audit, is around the upper end of current analyst expectations.
The group delivered strong cash generation in the final quarter. Net debt at the end of December 2020 was circa £110m.
Devro will announce its results for the year on 2 March 2021.
The FTSE 100 started the week on the back foot as worries over the Covid pandemic remained. The blue-chip index was down 0.1% to 6,732.01pts in the early going.
SSP Group, Naked Wines and AG Barr were among the early fallers, down 1.8% to 334p, 1.6% to 671.1p and 1.5% to 500.3p.
Devro climbed 2.6% to 158.8p on the back of its positive trading update for the year.
Other risers so far included B&M European Value Retail, up 0.9% to 508.8p, Hilton Food Group, up 1.8% to 1,018p, and Just Eat Takeaway.com, up 1.1% to 7,960p.
This week in the City
It is looking a lot quieter on the markets this week after the early flurry of Christmas trading updates have cleared.
Tomorrow sees Premier Foods release a trading statement.
Wednesday brings the inauguration of President Biden in the US. In the UK, there is an update from WH Smith, while P&G issues its latest quarterly results in the US.
Pets at Home is the latest retailer to update on Christmas performance on Thursday.
Friday then brings the monthly GFK Consumer Confidence survey and the ONS Retail Sales figures for December.