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Deliveroo cuts IPO range amid investor concerns

Deliveroo has cut the price range for its upcoming IPO following backlash from several fund managers over workers rights.

Gig worker compensation has been under greater scrutiny since the Uber ruling.
(Jack Taylor/Getty Images)

Deliveroo will price its upcoming IPO toward the bottom of its intended price range, blaming volatile market conditions. The news comes at a time when many high-profile investors are stepping away from the offering, citing concerns over how workers are paid and the planned dual-class share structure.

A number of the UK’s largest investors, including Legal & General Investment Management, Aviva Investors, Aberdeen Asset Management and M&G, said that they will not participate in the offering, the Financial Times reported.

Gig worker compensation has been under greater scrutiny since the UK’s Supreme Court ruled that Uber drivers must be treated as workers rather than self-employed. A study by the Bureau of Investigative Journalism found that, on an hourly basis, one in three Deliveroo riders earned less than the national minimum wage.

Investors also voiced concerns that Deliveroo’s planned dual-class share structure which would give its founder, Will Shu, a greater say over how the company is run than external shareholders. The UK has recently backed recommendations to relax listing rules, including allowing dual-class share structures, in order to entice companies to its stock exchange post-Brexit. Deliveroo’s listing was intended to be one of year’s blockbuster stock market debuts following a relative dearth of UK tech IPOs in the past year.

The new price range has been set between £3.90 and £4.10 per share—down from a previous maximum of £4.60—implying a valuation of up to £7.85 billion (about $10.8 billion) at the new top limit.

The London-based food delivery startup said that it wanted to price the offering responsibly so as to give investors long-term value, saying it was not linked to investors concerns but to a recent spate of underperforming IPOs. Online review platform Trustpilot saw its shares surge last week but has since fallen below its offer price.

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    Written by Leah Hodgson
    Leah Hodgson is a London-based senior reporter for PitchBook covering venture capital across Europe and the Middle East. Leah graduated from the University of Surrey with a BA in international politics with French. She has previously been a radio reporter in France. She later turned to financial journalism, covering the wealth management industry. She joined PitchBook in 2018.
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