'British Baemin' Deliveroo... 30% Plunge on First Day of London Stock Market Listing

Concerns Over Worker Treatment Lead to Asset Management Firms Skipping IPOs
UK's Financial Hub Status Shaken Post-Brexit

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Deliveroo, a food delivery company that had garnered high expectations with support from Amazon, saw its stock price plunge 30% on its first day of listing on the London Stock Exchange. This has raised warning signs for the UK government's plan to maintain its status as a financial hub after Brexit by actively attracting tech startups.

According to the Wall Street Journal (WSJ) on the 31st (local time), Deliveroo's stock price dropped 30% shortly after trading began on the London Stock Exchange that day. As a result, Deliveroo's market capitalization started at ?7.6 billion (approximately 11.8 trillion KRW) and fell to ?7.32 billion during the session, a decrease of up to ?2.28 billion (about 3.5 trillion KRW). The stock price volatility was so severe that trading was halted twice.

Founded in 2013 by former banker Will Shu, Deliveroo had been regarded as the most anticipated IPO in the European market this year. Due to the surge in demand for delivery services amid the COVID-19 pandemic, Deliveroo grew into a unicorn company valued at over $700 million (about 8 trillion KRW) even before going public. Last year, Deliveroo recorded a net profit of ?1.2 billion, an increase of about 54% compared to the previous year, thanks to the effects of COVID-19.

However, concerns among investors about Deliveroo's overvaluation and the refusal of major UK asset management firms to participate in the Deliveroo IPO due to labor treatment issues are believed to have contributed to the stock price plunge.

The WSJ reported, "Some investors are skeptical about Deliveroo's growth potential, anticipating a decline in delivery demand following the rollout of COVID-19 vaccines."

Additionally, a recent UK ruling requiring Uber workers to be directly employed has increased the likelihood that similar regulations will apply to Deliveroo, which operates a comparable business model. This has also been a factor deterring investors from participating in the Deliveroo IPO.

Aberdeen Standard, one of the largest asset management firms in the UK, stated, "As long-term investors, we aim to invest not only in profitability but also in sustainable companies," adding, "We have determined that Deliveroo has issues with its employment practices and the sustainability of its business model, so we will not participate in purchasing its shares."

Aviva, a large asset management firm managing over ?800 billion, also declared that it would not buy Deliveroo shares.

With Deliveroo, a tech company, receiving a poor performance report, the UK government's plan to develop the London Stock Exchange as an IPO hub for high-growth companies has also been disrupted. Initially, Deliveroo planned to list on the New York Stock Exchange, but switched to the London Stock Exchange after the UK showed signs of regulatory easing.

Meanwhile, Deliveroo, headquartered in London, UK, operates in over 800 cities across 12 countries including Europe, Hong Kong, Singapore, Australia, and the United Arab Emirates.

This content was produced with the assistance of AI translation services.