When food delivery startup Deliveroo announced plans to list on the London Stock Exchange at the start of the month, UK chancellor Rishi Suank personally lauded the move.
Sunak hailed the company as a “true British tech success story” and said Deliveroo would be the first of many major tech companies to chose London.
“We are looking at reforms to encourage even more high growth, dynamic businesses to list in the UK,” the chancellor said. “So it’s fantastic that Deliveroo has taken this decision to list on the London Stock Exchange.”
Deliveroo was meant to be the flag bearer for a new wave of tech companies coming to London thanks to stock market reforms announced in this year’s budget.
Now those ambitions are in doubt after Deliveroo’s disastrous IPO. Shares sunk 30% in the minutes after trading began on the company’s first day of dealing on Wednesday. The slump was the worst opening day performance of a major listing in years.
“On one side, you say it’s a bit of a disaster since any tech company now would think: no way London isn’t the place – the big funds are not on my side and the regulations are still not that good,” said Neil Wilson, senior market analyst at Markets.com. “On the other, it could really reinforce the need for change or the City would miss out on much more.”
The question many bankers and tech executives will be asking themselves is: were Deliveroo’s problems a one-off or is London still less tech-friendly than New York?
Deliveroo’s problems were apparent from the start. Shortly after the IPO was announced several of the City of London’s biggest institutional investors — including Aviva (AV.L), Aberdeen Standard Life (SLA.L) and L&G (LGEN.L) — all lined up to publicly say they would not take part in the float.