Shares in Deliveroo have crashed as much as 30% this morning as it made its long-awaited debut on the London Stock Exchange.
It announced before trading started today that the flotation had been priced at the bottom end of the previously flagged range, valuing the food delivery service at £1.2bn lower than hoped.
The group revealed its offer price had been set at 390p a share, giving Deliveroo a market cap of £7.6bn. But the price tumbled as low as 271p in the opening trading and are currently, at the time of writing, sat at 284p.
Just last week, the business announced a price range of £3.90 to £4.60, which would have valued it at up to £8.8bn at the top end of the range.
However, Deliveroo has been plagued by questions over continuing losses even as the takeaway market boomed throughout lockdown, as well as concerns raised from the City’s biggest fund managers, including Legal & General and Aviva, which publicly said they would not be investing in the much-anticipated IPO over worries about employment practices.
A dual-class share structure, giving founder Will Shu more voting rights in the floated company compared with normal shareholders, has also attracted controversy.
Despite the high degree of scrutiny Deliveroo has been under, the £7.6bn float is still the biggest London IPO for a decade.
Founder Will Shu said: “I am very proud that Deliveroo is going public in London - our home.
“As we reach this milestone I want to thank everyone who has helped to build Deliveroo into the company it is today - in particular our restaurants and grocers, riders and customers.
“In this next phase of our journey as a public company we will continue to invest in the innovations that help restaurants and grocers to grow their businesses, to bring customers more choice than ever before, and to provide riders with more work. Our aim is to build the definitive online food company and we’re very excited about the future ahead.”
Deliveroo raised £1.5bn from the sale of almost 385 million shares, with £1bn earmarked for new growth opportunities and the remainder providing a pay day for Shu and other existing shareholders.
Only investors who were allocated shares in the institutional offer are able to deal in the shares today, with the company set to go on the open market on 7 April.
Shares are trading under the ticker ‘ROO’.
In another debuted this morning, on London’s junior market, DTC ready meal maker Parsley Box began trading its shares.
Following an initial 5.5% rise from opening price 200p to 211p, shares are currently at 196.5p.
On Friday last week, the business announced it had raised £17m in its IPO, valuing Parsley Box at £84m.
The Edinburgh-headquartered company targets the Baby Boomer generation with ambient prepared meals.
CEO Kevin Dorren, who is also the majority shareholder, said this morning: “From an idea cooked up at the kitchen table to IPO in just four years is an incredible achievement and we’re proud to be celebrating this milestone together with our customers.
“The business has grown rapidly, but for us it is just the beginning of our journey serving the Baby Boomer + demographic.
“We are very pleased to welcome our new shareholders, both institutional investors and our customers who have endorsed the business by taking a stake in the company’s future.
“I am looking forward to leading the business through our accelerated growth plans to become a household name.”
Food inflation has inched higher in March but the continuing price war between mainstream grocers and discounters kept the lid on price rises.
Inflation for food increased to 0.3% last month, up from 0.2% in February, according to the latest BRC-Nielsen index.
Fresh Food prices fell for the fourth consecutive month in March, at a steady decline rate of 0.8%, the same rate as in the previous two months.
Ambient Food inflation rose to 1.7% in March, up from 1.6% in February.
British Retail Consortium CEO Helen Dickinson warned prices may not remain at low levels for much longer amid global pressures.
“While food prices inched up slightly compared to last year, they remain significantly below long-term averages, as grocers fiercely protect their market shares,” she said.
“Unfortunately, many retailers may not be able to sustain these low prices in the coming months. Rising global food prices, at their highest since 2014, as well as increased oil prices and shipping costs, and Brexit red tape will likely begin to filter through, pushing up prices at tills.
“Government must ensure that new checks and documentation requirements this autumn avoid introducing significant friction on the import of goods, otherwise British consumers will end up paying the price.”
Non-food prices fell by 4% in March, compared to a decline of 3.9% in February. This is the fastest rate of decline since May 2020.
While shop prices overall fell by 2.4% in March, the same rate of decline as in February.
Mike Watkins, head of retailer and business insight at Nielsen, said: “With consumer spend limited by pandemic restrictions, non-food retailers are keeping any supply side driven price increases to a minimum and in some cases are reducing prices, to encourage shoppers to maintain spending in the run up to Easter.”
Dickinson added: “Retail prices fell again in March as the third consecutive month of lockdown led many non-food retailers, especially clothing, to heavily discount their products. Low demand and intense competition online will help thrifty consumers find the bargains they are looking for. Prices of fashion and footwear have seen double digit declines in 11 of the past 12 months, highlighting how those worst hit have been working hard to tempt consumer spending.”
Logistics group Wincanton announced underlying revenues rose 15% year-on-year in its fourth quarter as digital shopping continues to boom.
It said in the trading update that its full-year results would be higher than market expectations.
Digital and efulfilment is set to deliver year-on-year growth of about 40%, with the sector bolstered by the start of operations at the west London CFC for Waitrose. Wincanton said the CFC has been running for just more than three weeks and, in that time, the team had picked and dispatched close to 20,000 orders.
Performance in grocery and consumer remained strong and is expected to grow by around 3% against a challenging year-on-year comparison, with the same quarter a year ago seeing the emergence of panic buying from consumers in the early weeks of the pandemic.
The sector has secured a two-year contract with Heineken to handle products to retail outlets throughout England and Wales.
CEO James Wroath said: “Wincanton has delivered another strong performance, maintaining our positive momentum throughout the final quarter of the year. Our people have met the challenges associated with operating in another lockdown and it is very satisfying to see all four parts of the business in growth and contributing positively to the group.
“We are also delighted to have expanded our eFulfilment capabilities and capacity further with our new site in Rockingham. This serves as a marker of our ambitions to capitalise on the growth opportunities presented by the increasing prominence of online retail.”
Shares in Wincanton opened 2.9% higher to 381.6p.
The FTSE 100 fell 0.3% to 6,753.73p this morining.
Earlier risers include Science in Sport, Hilton Food Group, Pets at Home and AG Barr, while Nichols, McColl’s, Just Eat Takeaway and Hotel Chocolat are among the fallers.
Yesterday in the City
The FTSE 100 logged a healthy 0.7% gain yesterday to 6,780.94pts.
It wasn’t such a rosy day at Irn-Bru maker AG Barr as shares took a 6.7% plunge to 486p after it reported double-digit drops in annual revenues and profits as lockdown took the fizz out of out-of-home consumption.
Tobacco giant Imperial Brands also fell 1% to 1,496.5p despite a trading update reporting a good start to the new financial year.
Risers yesterday included Total Produce, up 4.1% to 177p, WH Smith, up 3.8% to 1,841.1p, and Associated British Foods, up 2.1% to 2,425.8p.
Alongside AG Barr and Imperial Brands, other fallers included Real Good Food, down 4.8% to 3.7p, Wynnstay Group, down 4.6% to 482.6p, and Fevertree Drinks, down 4.5% to 2,193p.