Expect a bun fight for Deliveroo’s IPO

Russ Mould
7 March 2021

“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,” says Russ Mould, investment director at AJ Bell.

“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.

“Someone hungry for Deliveroo shares probably won’t see that as a big a hurdle to jump through. But if there is big demand for the shares then it looks like the food ordering platform is going to give priority to its more regular customers. 

“The idea that the more burgers you’ve ordered, the better the chance of getting shares in the IPO won’t go down well with investors who place high regard on ESG (environment, social and governance) issues. However, the mere fact the company is associated with fast food would mean such investors wouldn’t go near it anyway.

“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.

“All this suggests there is likely to be a bun fight for the £50 million worth of customer shares in Deliveroo at the IPO offer.

“Investors may look past the fact that the company is loss making and operates in a highly competitive market. Instead, they will focus on big growth opportunities and potential for Deliveroo to play a key role in consolidating the market through mergers and acquisitions.

“There is also the fact that some investors will see it as an easy way to make a quick 10% to 20% gain, the level at which shares in newly listed companies often ‘pop’ on the first day of dealings.”

Russ Mould
Investment Director

Russ Mould’s long experience of the capital markets began in 1991 when he became a Fund Manager at a leading provider of life insurance, pensions and asset management services. In 1993 he joined a prestigious investment bank, working as an Equity Analyst covering the technology sector for 12 years. Russ eventually joined Shares magazine in November 2005 as Technology Correspondent and became Editor of the magazine in July 2008. Following the acquisition of Shares' parent company, MSM Media, by AJ Bell Group, he was appointed as AJ Bell’s Investment Director in summer 2013.

Contact details

Mobile: 07710 356 331
Email: russ.mould@ajbell.co.uk

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