British food delivery firm Deliveroo recently announced that it had chosen London for its highly anticipated stock market debut. The company is reportedly aiming for a valuation as high as $10 billion, making it London’s most valuable IPO in the last three years. This would make it more valuable than some of London’s biggest companies including Sage (one of the few British companies in the FTSE top 100 tech list) and The Hut Group, which is currently the company with the largest UK IPO in over 5 years.

E-commerce giant Amazon led a 2019 financing round that valued Deliveroo at close to $3.5 billion. The company has since doubled its valuation, securing a $7 billion figure in a private financing round held in January 2021. The company said that it is looking to use the dual class structure for the first three years of the listing. Their decision to go public seems to have been influenced by a variety of factors.

The UK’s Stance on Tech IPOs 

While the firm was already doing well with Amazon on its side, a lockdown driven sales frenzy has undoubtedly given them the reputation and the numbers to get more investors on board for a higher valuation. Deliveroo’s IPO announcement also came only a day after the British Chancellor of the Exchequer, Rishi Sunak recommended that the UK’s rigid stock market rules be relaxed. One of the ways P.M Johnson’s cabinet is looking to rebuild the economy post Covid, is by luring more big tech IPOs to London. While it may not come in time for Deliveroo’s listing, a revision in the rules will reportedly allow big companies to opt for a “premium” listing using a dual class structure.

This revision however, will only be put in practice after a review commissioned by Chancellor Exchequer/ Finance Minister, Mr. Sunak.

While a dual class structure is extremely popular among tech companies in the United States, it is more or less frowned upon in the UK, as it can give executives an outsized influence over shareholder votes as compared to their stake in the company.

Deliveroo’s decision to list in London gives the city a much needed boost in terms of financial markets over New York and Amsterdam. With multiple new startups listing themselves on the exchange every week, the LSE seems to be seeing a feverish frenzy that is instilling a lot of confidence within the government and investors.

The Food Delivery Market 

It is worth noting that pandemic led delivery surges have helped delivery firms in general. DoorDash, a U.S based food delivery firm secured a staggering $60 billion valuation at its December IPO at the NYSE. Closer to the U.K, European rival Just Eat Takeaway.com is also currently valued at 1.1 billion pounds on the FTSE 100. Food delivery and takeaway services have seen massive growth in 2020. The industry’s two biggest markets, the U.S and the U.K, were also among some of the worst hit countries by COVID. This led to stricter lockdown rules which meant an absolute ban on restaurants and cafes for a while. This led to a massive surge in food delivery, especially among bigger companies like Deliveroo and DoorDash that ensured complete contactless delivery mechanisms.

While the pandemic led to a surge, the global food delivery market has been growing rapidly even pre-pandemic and might already have become way bigger than we think. Forbes suggests that the global food delivery market could soon be worth an astonishing $200 billion. While the food delivery market isn’t new by any means, a new, younger generation of consumers seems to have taken a fancy to this convenient dining option. Coupled with the accessibility of the internet, online food delivery is one of the most exciting markets right now.