The market emphatically endorsed my negative opinion of the Deliveroo share offer, which bombed from its offer price of 390p to close at 282p before Easter. The biggest London IPO since the commodity giant Glencore went public in 2011 now also stands as the most embarrassing flop in living City memory. Goldman Sachs and JP Morgan Cazenove, the deal’s bookrunners, must have known it was in jeopardy when they knocked more than a billion off their first indicative valuation after UK institutional investors lined up to say they wouldn’t touch it.
But 70,000 Deliveroo app users, having failed to read that signal, bought into the ‘community offer’ — and have lost an average of £200 each. The whole thing stinks like a left-behind prawn bhuna and it will be scant consolation if the banks involved are denied the £18 million of ‘additional commission’ payable at Deliveroo’s discretion had all gone according to plan.
As for the London Stock Exchange’s self-reinvention as the go-to bourse for hot tech stocks on this side of the Atlantic, I’m afraid it’s back to the drawing board — urgently so, as the prospects of EU market access for UK financial services continue to recede.
Another aspect of Deliveroo that institutions didn’t like is its dual share structure, which gives founder Will Shu 57 per cent of the voting rights on his residual 6 per cent holding of ‘Class B’ shares: the sort of device Lord Hill’s recent ‘UK Listing Review’ said London should accommodate ‘to make sure we attract companies in vital innovative growth sectors’. But far from being an exciting novelty, the dual structure is seen by some City elders as a return to notions of corporate control from half a century ago, when family-held multiple-voting B shares protected underperformers like the Savoy hotel from takeover.
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