Sunak boost as Deliveroo goes for $7bn London float
DELIVEROO today declared it had chosen London for its $7 billion stock market flotation in a major boost to Rishi Sunak’s ambition to make the UK more attractive for technology IPOs.
The announcement came just a day after the Chancellor endorsed recommendations for a relaxation on the UK’s stringent stock market rules that are seen as driving technology companies to float in the US, Asia or Amsterdam.
While those new rules — recommended by Lord Hill’s Listing Review — will not be enacted in time for the Deliveroo float, the improving environment they signalled is thought to have been a major factor in founder Will Shu’s decision.
Until today, it was unclear whether the year’s most hotly anticipated tech float of a UK company would be in the UK or on Wall Street.
Deliveroo’s float will follow those of Moonpig, The Hut Group and, in the pipeline, Trustpilot and Auction Technology Group.
In line with the new Lord Hill recommendations, Deliveroo is planning a dual-class listing of shares in which Shu’s stock will have greater voting rights than outside shareholders.
While this is controversial in London due to the threat founders could take decisions not in the interests of wider shareholders, it is commonplace in the US, Hong Kong and parts of Europe.
Tech founders say the structure is important to allow them to make longterm strategic decisions in their generally young and fast growing businesses without being hampered by the shortterm demands of investors.
The move means Deliveroo is going further away from London’s established norms than The Hut Group — last year’s mega UK tech float — where founder Matthew Moulding only demanded a “golden share” allowing him to block one thing: an unwanted takeover.
Deliveroo stressed the dual-class share system would be time limited at three years.
Shu set up the company in Chelsea in 2013 and prides himself on being its first rider. It now provides work for around 47,000.
In a statement today, Deliveroo said: “After eight years of operations and rapid expansion around the globe, choosing London underlines Deliveroo’s commitment to making the UK its long-term home.”
London Stock Exchange chief executive David Schwimmer welcomed the float, saying it: “highlights the UK capital markets’ ability to support leading global tech companies.”
The dual-class listing is likely to divide opinion among Britain’s biggest investors. Pirc, which represents the interests of institutional investors, has warned that the relaxation of the rules could lead to more accounting scandals as shareholders have reduced power to hold management to account.
Others have warned that the City watchdog, the Financial Conduct Authority, has repeatedly proved itself incapable of regulating companies as closely as its peers in the US, as scandals at Tesco, NMC Healthcare and Carillion have proved.