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Deliveroo narrows flotation price range as fund managers express concerns

Deliveroo lowers price range to between £3.90 and £4.10 per share

Deliveroo, the online food delivery service, confirmed on Monday that it will list its shares towards the bottom of the initially outlined range.

The original valuation price range, which suggested that Deliveroo could have been valued at up to £8.8bn, has now been revised to between £7.6bn and £7.85bn.

The company put the decision down to “volatile” market conditions.

In a statement, the company said: “Deliveroo has received very significant demand from institutions across the globe.”

However, following a price range of between £3.90 and £4.60 per share a week ago, Deliveroo narrowed its price range to between £3.90 and £4.10 per share.

A number of fund managers have expressed doubts over the listing and said they will reject it outright.

James Anderson, manager of Scottish Mortgage Investment Trust, considers the company to be too reliant on London and too focused on slower-growing markets, he told The Times.

This is despite Anderson gaining significant holdings in other home delivery platforms, such as Meituan in China, Delivery Hero, a key player in other Asian markets, and Grubhub in the US.

Anderson told The Times that replicating the success of the aforementioned companies would be difficult for Deliveroo. “I think their model is successful in the unusual economics of London and it’s much more difficult to spread elsewhere,” he said.

A number of other leading fund managers have expressed similar concerns, particularly to do with workers’ rights, the company’s business model and regulatory concerns.

Rupert Krefting, head of corporate finance and stewardship at M&G, said the company’s reliance on gig-economy workers made it a risk for investors.

While, David Cumming, chief investment officer at Aviva, warned of the risk that drivers will have to be reclassified as workers, which would entitle them to rights such as sick and holiday pay. “It’s an investment risk if the legislation changes,” he said.

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