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Deliveroo valued at $7bn+ ahead of IPO

Online food delivery firm Deliveroo has secured another $150m in funding from shareholders, including Amazon, as the company prepares to make its stock exchange debut with a total value of more than $7bn.

Deliveroo had already raised $1.5bn from investors with plans to use the funds to innovate, set up for delivery-only kitchen sites, and grow its online grocery business. Its highly-anticipated float, predicted to be on the London market – and touted to be as early as next month – will be the biggest new share issue in three years.

US investment banks JP Morgan and Goldman Sachs were hired to advise on the float. The company did not reveal how much each investor had contributed in Deliveroo’s latest funding round.

It has not yet been confirmed whether it will list in London or New York, but Yahoo Finance warns that Brexit may have “dented the London’s IPO appeal”. A listing in the capital city would ramp up competition nevertheless.

Last week, Jitse Groen – Takeaway.com’s chief executive – said that he would “make life very, very, very complicated for the competitors” in the capital by undercutting them on delivery prices and investing heavily in a new courier network.

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Deliveroo announced last month that it will be expanding and adding a further 100 cities and towns in the UK to its delivery service. It already has 140,000 restaurants on its platform.

Britain’s competition regulator, the Competition and Markets Authority (CMA), approved Amazon’s May 2019 purchase of a 16% stake in Deliveroo last August, overruling objections from local competitors Just Eat Takeaway and Domino’s Pizza.

Just Eat, however, managed to secure a £5.75bn deal to buy US equivalent GrubHub in June, as the restaurant industry rapidly evolves to the trend towards delivery and away from traditional dine-in services as a result of the pandemic.

Deliveroo currently operates across 12 countries – mostly in western Europe but also in Australia, Hong Kong, Singapore and the United Arab Emirates.

The company was founded by Will Shu — a former investment banker — in 2013. Its heavy investment in technology led to a loss of £319.9m in 2019, which forced the company to take out a short-term £198m loan to mitigate the losses, but enjoyed a surge in sales during the pandemic as online food delivery helped to subsidise the paralysis of the restaurant industry.

But since then, the coronavirus pandemic has driven a significant rise in appetite for online food delivery. Across 2020, Deliveroo more than doubled its revenues in the UK and Ireland.

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