Deliveroo is dropping the target price of its highly anticipated initial public offering (IPO) as more major UK investors count themselves out.
The delivery giant announced last week that it was targeting an ambitious market capitalisation of £8.8 billion in its IPO this week, selling shares for between £3.90 and £4.60.
However, Deliveroo has now dropped this target to the lower end of its estimates, announcing that it will now aim to sell shares for between £3.90 and £4.10 to achieve a market valuation of between £7.6 billion and £7.85 billion.
It comes after the list of major UK investors announcing that they plan to shun what could be London’s biggest IPO in a decade continues to grow.
Deliveroo was struck a huge blow this morning after one of Britain’s leading technology investors and renowned backer of rapid delivery companies James Anderson counted himself out.
According to The Times, Anderson, manager of investment trust giant Scottish Mortgage, said he believed Deliveroo’s model would be “much more difficult to spread” outside of London.
Anderson boasts a large stake in rapid delivery companies across the globe, including China’s Meituan and Delivero Hero alongside Grubhub in the US.
Scottish Mortgage joins Aviva Investors, Aberdeen Standard, M&G and Legal & General in shunning Deliveroo, despite founder Will Shu stating it has received “very significant demand from institutions across the globe”.
Shu added: “The deal is covered multiple times throughout the range, led by three highly respected anchor investors. Given volatile global market conditions for IPOs, Deliveroo is choosing to price responsibly within the initial range and at an entry point that maximises long-term value for our new institutional and retail investors.”
Last week a damning report from the Bureau of Investigative Journalism, which analysed thousands of invoices from couriers across the UK, revealed that one in three Deliveroo riders made less than £8.72 an hour, the national minimum wage for workers over 25.
This has raised major concerns among investors amid fears that the gig-economy model on which Deliveroo relies is under threat.
It comes after Uber, which pioneered the gig economy model, announced it would give all its UK drivers the same rights as workers, placing increasing pressure on companies like Deliveroo to do the same.