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Deliveroo’s value falls £1Bn a day before its stock market floatation

Deliveroo’s value falls £1Bn a day before its stock market floatation
Deliveroo’s value falls £1Bn a day before its stock market floatation

Deliveroo’s flotation on Wednesday, 31st March 2021, would reportedly record the company’s value at £7.6 billion after concerns regarding volatile stock markets and workers’ rights slashed over £1 billion off its top-end valuation.

Last week, the meal delivery service stated that its IPO could value the company at as much as £8.8 billion. However, the company confirmed on Tuesday that its shares had been valued at £3.90, which marks the bottom of the range set by the company.

As per Deliveroo, it had secured a remarkable demand for its shares from institutions across the globe, and led by three highly respected anchor investors, the transaction is covered several times throughout the range. The company further stated that given the fluctuating global market conditions for initial public offerings, it is opting to price in a responsible manner and at an entry point that provides maximum long-term value for the company’s new retail and institutional investors.

Sources estimated that the price will provide the company with a market capitalization of £7.6 billion upon the commencement of the trading of shares on Wednesday. Even if the listing is anticipated to be the largest initial public offering in London for a decade, numerous leading fund managers are avoiding the shares due to concerns regarding Deliveroo’s labor practices, which do not guarantee minimum rates of pay for its riders.

In addition, the listing will secure £1 billion for the company and a sum of £500 million for selling shareholders, comprising Will Shu and Amazon. It is to be noted that during the course of the pandemic, Deliveroo has benefited from an upsurge in food home deliveries.

On the back of the most recent lockdown, the organization stated that the overall value of transactions on its platform escalated by 130 per cent year on year in January in Ireland and the United Kingdom, and by 112 per cent in other markets.

Source credit: https://www.theguardian.com/business/2021/mar/30/deliveroo-valuation-drops-1bn-ahead-of-london-flotation

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Nandita Bhardwaj

Nandita holds a management degree with specialization in marketing, and boasts of a short-term experience in the field of recruitment. Following her passion for writing however, she decided to pursue a career in the field of content development. Presently, Nandita pens down news pieces for newsorigins.com, spanning the verticals of business, finance, and technology.