Deliveroo, backed by Amazon, is aiming for a valuation of up to $ 12 billion when it goes public in London

The Deliveroo app is displayed on a smartphone screen.

Thiago Prudencio | SOPA pictures | LightRocket via Getty Images

LONDON – UK grocery shipping company Deliveroo is targeting a valuation of up to £ 8.8 billion (US $ 12.2 billion) on its upcoming London IPO.

The Amazon-backed company has set a price range between £ 3.90 and £ 4.60 per share for its blockbuster IPO, implying an estimated market cap of between £ 7.6 billion and £ 8.8 billion.

Deliveroo’s market debut is expected to be one of the UK’s biggest offerings in years. The company announced plans for an IPO in London earlier this month, which will bring the UK capital a big profit after Brexit as it seeks to attract more high-growth tech companies.

A government-backed review called for reforms to the London listing regime, including the ability to list stocks with two classes, such as those developed by Google and Facebook. Currently, companies in the premium segment of the London stock market are unable to do so, which prevents them from being included in benchmarks like the FTSE 100.

Deliveroo has opted for a two-class share structure that gives CEO and founder Will Shu expanded voting rights. Shu receives 20 votes per share while other investors only have one vote. Deliveroo hopes to generate gross proceeds of £ 1 billion from the IPO.

“We are proud to be listed in London, the city where Deliveroo started,” Shu said in a statement on Monday.

“If we become a public company, we can continue to invest in innovation, develop new technical tools to support restaurants and grocery stores, make drivers more work and give consumers more choices to bring them the food they want from more restaurants than love ever before. “

Deliveroo says it will use the IPO proceeds to upgrade its platform and deepen on-demand deliveries of food that have benefited greatly from the coronavirus pandemic.

In a trade update on Monday, Deliveroo said the total value of transactions it processed more than doubled in the first two months of the year, boosted by the UK coronavirus lockdown. In the UK and Ireland, volume grew 130% year over year, while other markets grew 112%.

Deliveroo moved from a near-missed result in 2020 as part of a competitive review of Amazon’s minority stake in the company to operating profitability towards the end of the year as demand for online take-away apps was sparked by a pandemic.

“We have seen a strong start into 2021 and are just beginning an exciting journey in a large, rapidly growing online grocery delivery market with a great opportunity,” said Shu.

Deliveroo has earmarked £ 50m worth of shares to be offered to its customers. The company advertises the offer in a large advertising banner at the top of its app. This is due to the fact that retailers have been piling up in the stock markets over the past few months. This phenomenon has resulted in huge volatility in the price of stocks with strong short positions such as GameStop and AMC.

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