It’s a big day for the London stock market today as conditional trading kicks off in Deliveroo at a bottom-of-the-range valuation of £7.6 billion.
The food delivery operator had announced a price range of between £7.6 billion and £8.8 billion last week. But then cut the top end to £7.85 billion because of global market volatility.
A spokesman for Deliveroo said that demand for the shares had been “very significant”, but the group had opted to “price responsibly”.
Deliveroo is also facing a backlash over how its treats riders, with the world’s biggest investors saying they will not invest in the British tech firm.
Ketan Patel, fund manager of the EdenTree Sustainable and Responsible UK Equity fund, said: “EdenTree will not be investing in a business model which has little to commend for ESG investors, where the relationship between capital and labour is so asymmetrical. The rise of the S in ESG during the pandemic has highlighted social inequity and injustice within society. The Deliveroo business model is best characterised as a race to the bottom with employees in the main treated as disposable assets which is the very antithesis of a sustainable business model.
“For those investors who argue that only change can be brought by investing and engaging with management, we would urge caution as this approach has yielded little or no progress in businesses that are built around exploitative practices. To amend or remove these practices will leave a highly unprofitable business model and one that will not appeal to any investor. From an investment perspective, the threat of regulatory change remains the biggest issue for long-term investors and Uber is a real example of how fast the regulatory landscape can change, rendering the business model null and void.”
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