Shares in Deliveroo opened well below the price of their initial public offering on Wednesday, falling as much as 30% to one of the steepest trading debut falls for a major company on the London market for years.
The 390 pence price tag gave an overall valuation of £7.6 billion ($10.46 billion) for the company, less than initially expected after a string of major UK fund managers said they would not take part, citing concerns about its dual class share structure and its gig economy business model.
However, it lost £2.28 billion of its value within minutes of the market open, a development that one senior equity capital markets banker said would hurt the market for initial public offerings in the UK and Europe.
"Massive disconnect between the order book and the wider market," he said, asking to remain anonymous.
'Boom In Demand'
Deliveroo's self-employed drivers have seen a boom in demand during the COVID-19 pandemic, bringing food from otherwise-shuttered restaurants to housebound customers.
The listing of London-based company, founded by boss William Shu in 2013, is London's biggest IPO since Glencore's in May 2011 and also the biggest tech float ever on the London Stock Exchange.
However, a number of heavyweight investors including Aberdeen Standard Life, Aviva, Legal & General Investment Management and M&G opted out of the deal, citing concerns about gig-economy working conditions and the outsized voting rights that will be handed to Shu.
The poor performance is also a blow to UK finance minister Rishi Sunak's aim to attract more tech companies to London.