© Reuters. FILE PHOTO: A Deliveroo delivery rider cycles in London, Britain
By Julien Ponthus and Abhinav Ramnarayan
LONDON (Reuters) -Deliveroo shares rose on Wednesday, the first day retail investors could trade stock bought during the food delivery group’s initial public offering (IPO), while some of the company’s UK riders were expected to strike over fair pay.
At 0924 GMT on the first day of unrestricted trading, Deliveroo’s shares were up 2.3% at 286.4 pence, but still about 25% lower than the IPO price, following a hefty first day tumble when it made its stock market debut in London last week.
Deliveroo was given an initial valuation of 7.6 billion pounds ($10.46 billion) through a 390 pence price tag per share.
“Though Deliveroo has risen…on the first day of trading available to retail investors, it’s too soon to tell whether this is a vote of confidence in the stock,” said Connor Campbell, an analyst at Spreadex.
“The real test for the company is going to be the coming months, especially if a driver-strike does indeed go ahead.”
Hundreds of Deliveroo riders were expected to strike on Wednesday, asking for fair pay and basic workers’ rights, according to the Independent Workers’ Union of Great Britain (IWGB).
A Deliveroo spokesperson said that in a survey carried out on Tuesday, 88% of riders said they were happy with the company.
“This small self appointed union does not represent the vast majority of riders who tell us they value the total flexibility they enjoy while working with Deliveroo alongside the ability to earn over £13 an hour,” the spokesperson said in a statement.
“SMILING THROUGH THE PAIN”
The Financial Times reported on Tuesday that Goldman Sachs (NYSE:GS), a global coordinator on the IPO, bought 75 million pounds worth of Deliveroo shares to support trading.
The poor debut in London, which saw around two billion pounds wiped off Deliveroo’s valuation, came after heavyweight investors such as Aberdeen Standard Life (LON:SLA) and Aviva (LON:AV) sat the deal out, citing concerns about gig-economy working conditions and the outsized voting rights that will be handed to founder Will Shu.
Antonio De Negri, founder and CEO of London financial boutique Cirdan Capital said the company needed to recoup this lost value.
“One solution could be, for example, to offer part of the shares with more voting rights to those institutional investors interested in the business model of the British platform,” he said.
Small retail investors who bought shares via a “community” share offer, allowing Deliveroo’s customers to participate in the listing, were hurt by the first day losses as London Stock Exchange rules prevented them from trading until today.
“I am smiling through the pain and going to hold. I will ride it to 0 if I have to,” said Sam Elliot, a London-based primatologist who invested 250 pounds.
Deliveroo rises as retail investors join trading; riders plan strike
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