Online food delivery firm Deliveroo has announced that it plans to list on the London Stock Exchange.
The announcement, which many see as a major boost to the UK’s tech IPO market, came just a day after the government indicated a willingness to relax listing rules on the London Stock Exchange. The government is taking this action to make the country more competitive and attractive to IPOs after Brexit.
So, when is Deliveroo’s IPO happening and how can UK investors buy shares in the company? Let’s take a look.
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What is Deliveroo?
It’s an online food delivery firm founded in 2013 that operates in the UK and 11 other countries.
Customers use the company’s app to place and pay for an order which is then passed on to a participating restaurant. The food is picked up by a Deliveroo rider and delivered to the customer.
Currently, Deliveroo has over 140,000 restaurants in its network and over 110,000 riders.
Despite a few legal hiccups and years of operating at a loss, Deliveroo has grown to become one of the world’s biggest food delivery platforms.
In 2020, Amazon became one of the leading investors in the company after buying a £575 million stake.
Demand for Deliveroo’s service soared during the pandemic as people turned online to order food due to bans on eating out. As a result, the firm was able to finish 2020 in profit.
When is Deliveroo floating its shares?
Right now, there is no confirmed date for the IPO. But reports say it could happen later in the spring.
Deliveroo says that it’s going to use a ‘dual-class share structure’ in its flotation. This will give its founder and CEO William Shu enhanced voting rights and thus more control over the future direction of the company.
The UK recently signalled that it could relax rules to allow this type of stock market listing after a review commissioned by Chancellor Rishi Sunak.
In Deliveroo’s case, the dual-class structure will be limited to three years. The company will then move to a traditional single share class structure.
According to the BBC, Deliveroo’s IPO could raise the company’s value to $7 billion (£5 billion).
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How can I buy shares?
As Deliveroo is listing in the UK, you’ll be able to buy shares on the day of its IPO. If you are not sure how to buy, the good news is that it’s not that complicated.
One of the easiest ways to buy shares is through a share dealing account. This is basically an account that allows you to trade shares from any company that’s listed on the stock market, including Deliveroo, if and when it’s listed. If you are interested in knowing more, check out our comparison of the top-rated share dealing accounts.
Another easy way to buy shares is through a stocks and shares ISA. The main advantage of a stocks and shares ISA is its tax-efficiency. If you invest this way, you won’t pay any income tax or capital gains tax on your profits.
Keep in mind, however, that tax rules can change and their effects on you will depend on your individual circumstances.
Can I buy shares pre-IPO?
It might be possible to buy Deliveroo’s shares before the official IPO.
The main advantage of getting in early is that you can buy stocks at their actual IPO price before prices potentially go up upon flotation due to pent up demand.
That said, buying pre-IPO shares as a retail investor might not be easy. That’s because most companies tend to limit this opportunity to select investors who tend to be institutional investors.
However, some brokerages, investment banks and even mutual fund companies may receive pre-flotation stock to sell to their customers or clients before an IPO. Developing a relationship with one of these entities could help you access pre-IPO stock.
Should I buy Deliveroo’s shares?
That’s a good question.
Ultimately, the decision is yours. The most important thing is to always do your research before parting with your money.
Make sure you understand the company-specific risks and how the investment fits into your personal investment strategy. If you are unsure, it might be useful to speak to a financial adviser first.
