April 14, 2021

Deliveroo serves up £50m community fund as £7.5bn float looms

March 05, 2021

Deliveroo will distribute a £50m funding pot to restaurants, riders and community groups as it seeks to portray itself as a responsible corporate citizen following a blockbuster flotation that could value it at around £7.5bn.

Sky News understands the restaurant and grocery delivery app will launch the Communities Fund after an initial public offering in London that will be formally unveiled on Monday.

The five-year pot of money will be earmarked for grants to restaurants to assist them with the cost of reopening after the nationwide lockdown, delivering meals to vulnerable groups and helping its army of riders access affordable electric bikes.

It will be announced just days before one of the most prominent IPOs in London for years - the details of which were exclusively revealed by Sky News last month.

Will Shu, Deliveroo's founder and chief executive, said: "Customers, restaurants and riders are at the heart of their local communities - and that's what we care about too.

"Being recognisable in the community isn't enough; being part of local communities is what matters.

"We want to support the initiatives that matter most to our riders, restaurants and riders."

Half a dozen investment banks, led by Goldman Sachs and JP Morgan, have been lined up to oversee the flotation, which will take place at a big premium to a $180m fundraising announced just weeks ago.

Deliveroo recently announced plans to expand into a further 100 towns and cities across the UK, enabling it to reach an additional four million people.

It has appointed Claudia Arney, a former Premier League and Ocado director, as its chair, and Next's chief executive, Lord Wolfson, as an independent director.

This week, it confirmed that it would float in London with a dual-class share structure for three years that will allow Mr Shu to retain control of the company.

Its float will come after Lord Hill, the former EU commissioner, published a review of London's listings regime with the objective of attracting high-growth technology companies to the City.

Amazon-backed Deliveroo is one of Britain's best-known technology 'unicorns' - companies worth at least $1bn.

Its decision to float in the UK was welcomed by the Chancellor Rishi Sunak, who hailed it as "a true British success story".

Nevertheless, Deliveroo continues to face questions about the terms on which its riders work for it and the funding model it uses with restaurant partners.

Amazon's investment - following a lengthy competition inquiry - as part of a $575m fundraising has prompted Deliveroo to turn its attention towards further innovation in the fight against rivals Uber Eats and Just Eat Takeaway.com.

A bumper flotation will provide liquidity to many of Deliveroo's longest-standing shareholders, with notable names on its investor register including the private equity firm Bridgepoint and the institutional investors Fidelity and T Rowe Price.

Deliveroo now has around 45,000 restaurants on its platform in the UK, and it has recently started allowing customers to reward riders after their delivery has arrived.

Its own blockbuster valuation comes at a torrid time for many of its restaurant partners, with hospitality chiefs warning that hundreds of thousands of jobs will disappear from the sector without further state support.

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