LONDON—Deliveroo, backed by Amazon.com Inc. , set a price range for its planned London listing with an upward valuation of $12 billion, posing a test for continued investor appetite in online food-delivery services.
In December, U.S. peer DoorDash Inc. priced its initial public offering at $102 a share, easily surpassing the San Francisco-company’s expected price range of $90 to $95. Part of that enthusiasm was due to the explosion of home delivery brought about by the coronavirus pandemic. But as vaccinations increase in many rich countries, including the U.S. and Deliveroo’s home market of the U.K., it is unclear how sustainable delivery growth will be if people start to flock back to restaurants.
Deliveroo’s backers think there is still room to grow. Earlier this month, Deliveroo’s IPO was expected to value the company at around $10 billion, according to people familiar with the matter.
Deliveroo plans to raise £1 billion, equivalent to $1.4 billion, following the issuance of new shares. As part of the offering, Deliveroo said existing shareholders will also sell a portion of their stakes, but that money won’t go to the company.
Amazon owns a 16% stake in Deliveroo. It couldn’t be determined whether Amazon and other existing shareholders will sell down any of their positions as part of the IPO. Typically those decisions are made depending on demand and the pricing of the offering, according to people familiar with the matter.
