Deliveroo is preparing to go public on Wednesday in the United Kingdom. An introduction that asks questions. We take stock.
What is Deliveroo?
Deliveroo is a UK meal delivery platform. Born in 2013, it is built around an application that connects customers, delivery people and restaurants.
Its delivery men, on bicycles or scooters, usually men, are self-employed people recognizable by the large blue backpacks they carry on their backs.
Present in ten countries, Deliveroo employs 2,000 people, works with 115,000 restaurants in 800 cities around the world, and has some 100,000 delivery people.
In France, in 2019, it operated in more than 300 French municipalities and worked with 11,500 delivery people.
How is the IPO going?
Deliveroo has set the price of its shares at 3.90 pounds (4.57 euros). The total valuation will be 7.6 billion pounds (8.9 billion euros).
The operation will be the largest in London since Swiss mining group Glencore in May 2011.
A model that questions
Deliveroo and other digital platforms like Uber are increasingly contested, and face growing social protest. Several strikes and rallies have taken place in the UK, France and Australia in recent days. The British independent workers’ union, the IWGB, is planning action on April 7.
In question, the social model of these companies: self-employed workers, working in France under the self-entrepreneurship regime, are very precarious. A study relayed by the IWGB ensures that some Deliveroo delivery men receive poverty wages, sometimes falling to 2 pounds an hour as in the case of a delivery man from the north of England.
However, the tide is starting to turn. The British Supreme Court has just forced the car booking giant Uber to grant minimum wage and paid time off to its drivers in the United Kingdom. Deliveroo ensures for its part that its deliverers seek flexibility and are paid more than 10 pounds per hour on average.
In Spain, the Spanish government has just considered that the deliverers of Deliveroo and its competitors are now employees and will be able to benefit from social protection, a first in Europe.
One of the winners of the epidemic
Deliveroo figures, alongside many other technological platforms, as one of the winners of the health crisis.
With the confinements, the platform has allowed restaurants to continue to operate with take-out meals and is attracting more and more customers cloistered at home.
The company decided to diversify in 2018 by offering grocery delivery to supermarkets, which again has borne fruit with the pandemic.
He now works with big brands like Aldi, Carrefour, Casino, Picard, Marks and Spencer or Waitrose.
Deliveroo’s IPO is therefore not taking place in the best possible context, and the viability of its economic model now worries even very influential investors in the City.
Several asset management giants, such as Aberdeen Standard and Aviva Investors, each weighing hundreds of billions of pounds, are unwilling to invest in the company, citing the bad example set by its social practices.
Deliveroo also had to revise its ambitions downwards, citing the volatility of market conditions around the world. In addition, technology stocks had a difficult session in the United States and Europe on Monday, which may have complicated the situation.
Its share price (3.90 pounds) is in the low range of what it had expected, as the company hoped its valuation could reach 8.8 billion pounds.
The digital platform also revealed that it had set aside 112 million pounds in 2020 to deal with the consequences of pending litigation. Delivery men are in particular on appeal in the United Kingdom to obtain a collective agreement.
Deliveroo, in which the giant Amazon holds 16% of the capital, takes the opportunity to raise 1 billion pounds of new money to finance its growth, even if profitability is not yet at the rendezvous.