Europe open: No appetite for debutant Deliveroo from investors

The pan-European Stoxx 600 was flat at the opening. The UK’s FTSE 100 was down 0.36% reflecting the lack of appetite for the latest public offering.

Shares in the fast food delivery platform opened well below the IPO price, and were down as much as a third to 275 pence. Deliveroo was priced at 390 pence per share, valuing the company at £7.6bn.

Peers Just Eat Takeaway and Delivery Hero fell 2.7% and 1.9%, respectively.

Markets.com chief analyst Neil Wilson said that even though the IPO was priced at the bottom of the range, “Deliveroo was demanding too high a price tag for a loss-making delivery platform in a very competitive space with a questionable path to profitability”.

“The books were covered, it was just plain mis-priced,” he said.

Spreadex analyst Connor Campbell said fund manager worries about Deliveroo’s labour practices had contributed to the poor market showing.

“Deliveroo has been able to grow to the point of launching on the stock market in part thanks to the exploitation of its workers. Now, said exploitation is one of the main reasons behind its sour start to life as a public company, with multiple leading fund managers expressing concern over its labour practices,” he said.

“It is maybe a case of a perfectly zeitgeisty company in one sense – Deliveroo is a primary pandemic beneficiary – coming of age in the wrong moment, i.e. in the era of ostensible environmental, social and corporate governance.

“And before asset managers start feeling too angelic, the fact Deliveroo is yet to make a profit, even with the help of the pandemic, is likely also a cause for concern.”

In other equity news, Swedish clothing retailer H&M fell after the company reported a quarterly loss and said it would not propose a dividend at its annual general meeting.

Credit Suisse shares fell again on concerns over a possible link to the worries of Archegos Capital, which defaulted on margin calls earlier this week.