By Jack Denton
Food delivery service Deliveroo is exploring an initial public offering for next year, according to reports.
U.K.-based Deliveroo is in talks with potential advisers about going public in 2021, according to confidential sources who spoke to Bloomberg , which reported that no final decisions have been made. Deliveroo representatives told MarketWatch that they “do not comment on this kind of speculation.”
The company is backed by Amazon /zigman2/quotes/210331248/composite AMZN -2.00% , which has owned 16% of Deliveroo since its investment was approved by the U.K. Competition and Markets Authority (CMA) in August.
The coronavirus pandemic has proved to be a boom for food delivery, with millions of housebound consumers ratcheting up demand for the convenience service. The sector is expanding and Deliveroo’s European rivals Just Eat Takeaway.com /zigman2/quotes/216303066/delayed UK:JET -1.05% and Delivery Hero /zigman2/quotes/208380525/delayed XE:DHER -0.62% have both made substantial acquisitions this year.
Deliveroo, which operates in over 200 cities across 12 countries, initially suffered at the beginning of the pandemic as partner restaurants themselves were closed. The CMA said that Deliveroo met the criteria for a “failing firm” due to the initial impact of the coronavirus on its business.
However, the CMA said that Deliveroo’s finances rebounded from April onward as its mix of restaurants shifted away from large chains, several of which had closed, toward smaller, independent restaurants, and the food delivery market as a whole recovered. “Both factors contributed to a rapid and significant turnaround in Deliveroo’s financial position,” the CMA said, as it cleared Amazon’s 16% investment in August.
After the food delivery company raised funds in 2017, its value was at least $2 billion, but no updated valuation has been made by the company since the $575 million investment led by Amazon and subsequent lockdown boom.
The Amazon deal, initiated in May 2019, was subject to scrutiny from regulators concerned that Amazon’s stake in Deliveroo could harm competition by preventing Amazon from re-entering the online restaurant delivery market or expanding its presence in convenience grocery delivery.
The pandemic has also provided an opportunity for food delivery companies to branch into other home delivery sectors. As British supermarkets — already a cutthroat industry — battle for supremacy in the e-commerce space, they have turned to this existing and agile sector to quickly expand their home delivery services.
Deliveroo has partnered with grocer Waitrose /zigman2/quotes/208789734/delayed UK:JLH 0.00% , while rival UberEats /zigman2/quotes/211348248/composite UBER +1.48% delivers groceries for Walmart’s /zigman2/quotes/207374728/composite WMT -1.22% Asda, and Morrisons’ /zigman2/quotes/205533138/delayed UK:MRW +0.76% foodstuffs are available via Amazon with free delivery for Prime members on orders over £40 ($51).