Deliveroo reduces IPO stock price range after investor reaction

LONDON – Food delivery start-up Deliveroo slashed the price of its shares ahead of its IPO on the London Stock Exchange.

The Amazon-backed company said on Monday it would now sell shares for £ 3.90 ($ 5.40) at £ 4.10 each instead of £ 3.90 at £ 4.60 each. As a result, Deliveroo’s market cap will be between £ 7.6bn and £ 7.8bn instead of £ 7.6bn and 8.8bn.

It comes after several large investors said they plan to avoid Deliveroo’s IPO on April 7 over workers’ rights and the company’s shareholding structure, which gives the CEO Will Shu more than 50% of the voting rights.

The UK’s largest fund manager Legal and General Investment Management, which manages more than £ 1.3 trillion in assets, said he would likely not be involved, citing concerns about the economy odd jobs in which Deliveroo operates and the shareholding structure of the company. Aberdeen Standard and Aviva Investors, which manage more than £ 800 billion between them, have expressed concerns about the rights of Deliveroo workers, while M&G Investments has said it also plans to skip the IPO.

It also comes after the Self-Employed Union for Great Britain pointed out that some of Deliveroo’s runners can earn less than £ 2 an hour, while Shu was expected to make up to £ 530million in the Initial Public Offering.

Deliveroo dismisses accusations it does not treat its runners properly and says its platform gives them the flexibility to work out when they want, much like rivals like Just Eat and UberEats. He says runners earn £ 13 an hour on average during the busiest times.

Deliveroo offered to pay loyal couriers a bonus of between £ 200 and £ 10,000 on the IPO, with the average payout being £ 440. However, disgruntled runners staged a strike in London on Sunday.

Deliveroo insisted that the reduction in the share price had nothing to do with investor reaction and union action, insisting it was purely due to market conditions. He pointed out that four of the technology’s six IPOs in the United States last week’s price were below the offer price.

“Given the volatile global market conditions for IPOs, Deliveroo chooses to responsibly price within the initial range and at an entry point that maximizes long-term value for our new institutional investors and individuals, “said a spokesperson for Deliveroo.

They added that Deliveroo had seen strong demand from investors around the world, but declined to say which ones. “The deal is covered multiple times across the lineup, led by three highly respected benchmark investors,” the spokesperson said.