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Leading investors Durable Capital Partners and Fidelity Investments have partnered together, funding $180 million into the renowned UK-based takeaway business, Deliveroo. When the business had started in February 2013 it was initially based in the UK, in which it had later globally expanded to countries such as Hong Kong, Singapore, the UAE and Australia.
Although the company had been invested in by other corporations such as Amazon – this had not been enough to allow the company to have an initial public offering (IPO), even though the e-commerce business is another company which offers takeaway services. However, as a result of the significant revenue which had been made, this is what led the leading company to become an IPO as the “significant growth potential in the online food delivery sector in which consumer adoption is accelerating”. In which, if revenues were to continue as such, it has been said in reports provided by the company that the group could float as early as April 2021.
(Source: Hartlepool Mail)
IPO Rumours…
This will be the first time that Deliveroo has accepted all claims and rumours regarding an IPO. Founder and CEO of Deliveroo, Will Shu has said that with such investors and promising investments he plans to use all the new money to improve the business for all consumers, riders and restaurants included. As Deliveroo’s current revenue has significantly increased to more than 7 billion dollars- it has been announced that there will be an expansion of the business, in which Mr Shu had used competing brands such as Uber- who also offer Uber Eats- as an example. Furthermore, with the much fruitful investment that has been put in place, Deliveroo hopes to even include a high-growth grocery delivery sector, alongside plans to extend the ‘delivery-only’ kitchens sites globally and extend the subscription service to wider markets.
Although he is the founder of the company, Mr Shu owns a 6.8 per cent stake- according to Sifted,which has also been confirmed by Deliveroo. As a result of the recent $7 billion revenue that was released earlier this January, the valuation of Shu’s stakes have risen to a whopping sum of $476 million.
Preparing For The Pandemic Peak…
The company benefited immensely since the peak of the pandemic as consumers were spending much more than usual. As a result of this, there had been a very successful flotation within the stock market for Deliveroo, which instantly recovered the company from any prior financial shock that the pandemic had caused. Furthermore, to prevent a downfall from reoccurring once more, Will Shu had said that they will use all investments towards new tech tools in aid of restaurants, provide riders with more work and extend the choice of cuisine for customers.
One of Deliveroo’s prime stakeholders- Amazon, whom of which owns a 16 per cent stake- after investing a whopping $575 million, shortly after the takeaway company had announced that they could collapse due to the number of restaurants closing in the first lockdown in March 2020 had invested into the company as they had proclaimed that there was a “significant decline in revenues”. Many other leading takeaway services in the UK such as Just Eat and the Domino’s Pizza group had all objected this offer, however in August 2020- the Competition and Markets Authority had accepted and cleared Amazon’s investments.
If taken into any consideration whatsoever, Deliveroo has the potential to be an investing hotspot for many investors out there as it is evident that the company holds a lot of financial leverage. With the current news giving investors the so-called green light of confidence, the valuation of Deliveroo shall inevitably increase too. This was evident in 2017, when the company has increased its funds, reaching a revenue of $2 billion. Although no recent valuation has been made since the recent investment of Amazon and the lockdown boom, there is still potential within the market for Deliveroo’s growth and hopes for a much higher valuation.
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