Deliveroo Plans to List in London With Dual-Class Structure

Deliveroo is planning an initial public offering in London as the U.K. prepares to reform listing rules that would allow the company to have a dual-class share structure.

The share structure, which typically gives founders a greater say in shareholder votes, will provide Chief Executive Officer Will Shu with the “stability” to execute long-term plans, the food-delivery company said in a statement Thursday. The dual-class setup will last for three years.

Deliveroo, which was founded in 2013 and provides online ordering and delivery services to restaurants and grocery stores, was valued at more than $7 billion in its latest funding round in January. The company and others like it have seen an explosion in orders in the last year as Covid-19 restrictions kept customers out of stores and restaurants.

In December, Deliveroo said it had been profitable “at the operating level” for more than six months. Operating revenue in 2019 rose 62% to 771.8 million pounds ($1.1 billion).

A review of the U.K. listings regime, led by former European Union commissioner Jonathan Hill, recommended this week to allow dual-class structures and ways to ease the path for special-purpose acquisition companies. The proposed changes aim to make London more attractive after the country’s split from the EU, which took effect at the end of last year.

While no timeline for the implementation of the reforms has been given, Chancellor of the Exchequer Rishi Sunak said Wednesday the government will act quickly on the proposals.

Some of London’s biggest investors have expressed concerns that changing standards could weaken investor protections. Dual-class share structures generally are in “conflict with increased stewardship requirements,” said Colin McLean, chief investment officer at SVM Asset Management, adding that they can limit shareholders’ ability to change a company’s management or alter the direction of a business.

Ahead of the review, the Universities Superannuation Scheme, the largest private pension manager in the U.K., warned against a “race to the bottom” on listing standards that could weaken investor protections.

While welcoming the proposals, the Investment Association -- an influential body representing the fund management industry -- said it will work with the government and regulator to ensure there are appropriate investor protections for minority shareholders.

Listings in London are surging, meanwhile, with IPO proceeds for 2021 already totaling 3.3 billion pounds ($4.6 billion), the most for this time of the year since 2006, data compiled by Bloomberg show.

©2021 Bloomberg L.P.

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