Deliveroo’s IPO has turned into a debacle in London. The stock market debut was already watched with excitement in advance, because there is unrest about the terms of employment of Deliveroo deliverers. Ultimately, that killed them at the IPO.
Four questions about Deliveroo’s remarkable IPO.
1. How does an IPO actually work?
With an IPO, a company sells its shares, part of the company. These shares are bought by investors. The big advantage for the selling company is that a lot of money comes in in one fell swoop. This is useful for investments or to pay off debts, for example. Investors also benefit: their share grows with the company. If the company makes a profit, the shareholders receive a part of that profit, also known as a dividend.
At the IPO, companies draw up a prospectus, these are financial figures and plans for the future. They must also be open about profits and losses while on the stock exchange. These rules have been drawn up by Euronext and ensure that the exchanges are fair. Would you like to know more about an IPO? Then watch this video from NOS at 3.
2. What went wrong with Deliveroo?
The delivery company is under fire because of the working conditions of the deliverers. A survey of 300 British deliverers shows that they are seen as freelancers against their will. They are paid below the minimum wage and do not receive a holiday allowance. Unacceptable, according to various unions.
Deliveroo deliverers are also seen as freelancers by Deliveroo in the Netherlands. On February 15, the Dutch court ruled in a case that the FNV union had filed in collaboration with Deliveroo deliverers. The judge ruled that Deliveroo must offer employment contracts to the deliverers.
Investors see the situation regarding the terms of employment of the meal delivery service as a risk. Because suppose: Deliveroo makes a loss, they lose their investment. In the prospectus, the official IPO document, Deliveroo states that a change in policy would have a negative effect on the company.
3. What makes this IPO so remarkable?
The IPO is the largest IPO since the credit crisis. For the debut, the introductory price was more than 4 pounds (4.69 euros). After it became clear that investors are very cautious around Deliveroo, the company adjusted the launch price to 390 pence (4.57 euro). Still, the price made a dip after the opening, to 271 pence (3.17 euros). Investors who paid 390 pence for a share in the pre-subscription had already lost more than one-third. Later the decline was somewhat restored.
Especially the fact that investors have such an attitude towards an IPO is remarkable.
4. Will Deliveroo change the working conditions?
In the above-mentioned Dutch lawsuit, the FNV union was already right. According to the judge, the deliverers are not self-employed and must be given an employment contract. Deliveroo appealed, but FNV was also right there. The company is now obliged to adjust the working conditions, so far there has been no response.
It is remarkable that two years ago the judge made the same judgment in summary proceedings. Deliveroo has not changed its policy since then. On the Deliveroo site you can read that an EEA citizen does not need a Chamber of Commerce or VAT number to work. A non-EEA citizen does need these to work for Deliveroo.
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