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Deliveroo opts for London IPO after listing rules review

Thu 04 March 2021 12:09 | A A A

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(Sharecast News) - Deliveroo has chosen London for its initial public offering after a review of listing rules recommended allowing founders to retain greater control after a company has floated.

The food delivery company is expected to be valued at several billion pounds when it lists its shares. Its decision to float on the London market is a boost for the UK amid hot competition for tech IPOs.

Deliveroo said it planned a time-limited dual-class share structure "to ensure stable execution of management's strategy and enable continued focus on ambitious long-term growth plans". The arrangement, giving founder Will Shu extra control, will be in line with recommendations made by Jonathan Hill in a review published on 2 March.

Shu founded the company in 2013 and was its first delivery rider. It now operates in a dozen markets in Europe, Asia and the Middle East. Delivroo has faced controversy about working conditions for its riders, who are part of the gig economy.

Hill's recommendations were designed to attract big tech IPOs and so-called blank cheque companies to the UK after London lost out to rival exchanges such as New York. But critics have said the proposals could weaken governance and undermine the integrity of the London market.

Chancellor Rishi Sunak has welcomed Hill's proposals but they still need to be approved by the Financial Conduct Authority. Sunak took the unusual step of providing a quote for Deliveroo's press release announcing its listing plans.

Sunak said: "We are looking at reforms to encourage even more high growth, dynamic businesses to list in the U.K. So it's fantastic that Deliveroo has taken this decision to list on the London Stock Exchange."

Deliveroo said it would have the dual-class structure for three years before switching to a traditional single class of shares giving all shareholders equal rights. It said it would have strong corporate governance standards including a majority of independent directors from the outset.

Claudia Arney, Deliveroo's chair, said: "The time-limited dual class structure would provide Will and his team with the certainty needed to execute against their ambitious growth plan to become the definitive online food company. We welcome Lord Hill's recommendations to support modernisation of the market and continued tech sector growth in the UK."

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