7th Mar 2021 12:09
(Alliance News) - AJ Bell PLC on Sunday lauded Deliveroo's decision to include retail investors in its planned London stock market float, rather than "restricting" access to institutions.
Deliveroo on Thursday confirmed it has picked London for a potential listing, set to be the biggest in a flurry of initial public offerings at the start of 2021.
The IPO is expected to value the takeaway food delivery service at up to GBP7.5 billion. Deliveroo said its decision to go public in London underlines its commitment to make the UK its "long-term home" despite global growth ambitions.
"It's great to see Deliveroo extend its IPO to retail investors and not follow the typical route of restricting the shares to institutional investors like pension funds," AJ Bell Investment Director Russ Mould said.
"AJ Bell has been campaigning for fairer access for retail investors at the IPO stage, and this is a step in the right direction. However, it looks like interested parties must have ordered at least one item from Deliveroo to be able to register interest for the IPO and they will need to have downloaded the company's app, so it's not a simple case of access for everyone with no strings attached."
In February, the bosses of Hargreaves Lansdown PLC, AJ Bell and Interactive Investor Services Ltd on Thursday called on the UK government to ensure the ability of retail investors to participate in London IPOs.
Hargreaves Lansdown Chief Executive Chris Hill, AJ Bell CEO Andy Bell and Interactive Investor CEO Richard Wilson co-sent a letter to Jon Glen, economic secretary to the UK Treasury & City minister, calling on him "to consider the rights of retail shareholders in relation to IPOs".
The heads of the three companies wrote to Glen asked that he consider forcing companies to include retail offers in new flotations, as well as to open a wider consultation on the subject.
The letter pointed to "recent high-profile examples" of retail investors being excluded from the IPOs of online cards retailer Moonpig Group PLC, boot maker Dr Martens PLC and Hut Group owner THG PLC.
In all three cases, the share prices rose to an instant premium to the IPO price once trading began, forcing private investors to pay more.
"As it stands, retail shareholder rights are almost completely ignored when it comes to the vast majority of IPOs, which largely take place between City institutions behind closed doors," the letter said.
Deliveroo is eyeing a listing on the London Stock Exchange just eight years after it was founded in the city by Will Shu.
It comes after the company saw demand soar during the pandemic as hundreds of restaurants across the UK sought to join its platform after their physical sites were closed to dine-in customers.
The potential float plans are expected to include a time-limited dual-class share structure in line with the findings of the recent UK Listing Review. The structure involves two classes of shares with different voting rights, allowing founders greater control over big decisions.
"Some people wouldn't dream of putting money in a company associated with junk food, but there will be others who see a big opportunity. A year of various lockdowns has fuelled demand for companies like Deliveroo and there is an expectation that habits formed during the pandemic will remain long into the recovery," AJ Bell's Mould said on Sunday.
"All this suggests there is likely to be a bun fight for the GBP50 million worth of customer shares in Deliveroo at the IPO offer."
By Eric Cunha; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
AJ Bell