Interactive Investor

IPO boom: Trustpilot rallies ahead of Deliveroo float

23rd March 2021 15:30

Graeme Evans from interactive investor

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As the biggest IPO in the UK for years prepares to go live, Trustpilot demonstrated pent-up demand for new issues.

The bigger-than-expected £1 billion IPO of Trustpilot today highlighted continued appetite for new tech stocks ahead of the planned mega-float of food delivery app Deliveroo.

Trustpilot's top-of-the-range starting price of 265p proved no deterrent for institutions as they snapped up shares in conditional dealings to drive the consumer reviews site 10% higher.

The strong demand comes a day after loss-making Deliveroo caused surprise by pricing its blockbuster IPO with a market capitalisation of between £7.6 billion and £8.8 billion.

That would make it the biggest flotation since Glencore (LSE:GLEN) in 2011 and comfortably bigger than last year's initial valuation of £5.4 billion for Hut Group owner THG (LSE:THG).

Deliveroo's customers, restaurant partners and delivery riders have the opportunity to take part in this month's flotation after the company made up to £50 million of shares available in a community offer. They can apply for £250, £500, £750, or £1,000 of shares priced at around 410p each.

The bumper valuation is more than the £7 billion implied by a recent fundraising round and comes after the pandemic caused a significant upturn in demand.

The enthusiasm of investors for tech IPOs, following a barren few years, was highlighted in today's Trustpilot debut, which gave the Copenhagen-based business a market cap of £1.08 billion rather than the £775 million forecast earlier this year.

The flotation has generated big profits for AIM-listed venture capital firm Draper Esprit (LSE:GROW), which first invested in Trustpilot in 2013 and has since more than tripled its holding through a combination of secondary acquisitions and follow on funding rounds.

Its total investment was £29.7 million, but Draper has raised proceeds of £78.3 million after selling down part of its holding in the IPO. It will continue to hold 7.9% in shares amounting to £85.5 million.

Chief executive Martin Davis said: "Trustpilot has done fantastically well and we're proud to be part of this next stage in its journey.”

Other IPOs to watch 

Another tech-based stock heading for the London market is PensionBee, which offers an online service allowing people to manage all their pensions in one place.

It today confirmed plans to join the high growth segment of the main market. Designed for rapidly growing companies, Just Eat Takeaway.com (LSE:JET) is the only British company to have listed there so far.

The business, which has about 130,000 active customers and £1.5 billion of assets under administration, is reportedly set to be valued at £350 million in the listing. The float will be targeted at institutional investors, although over 8,000 eligible customers have so far registered to take part in a retail offering being run through PrimaryBid.

PensionBee was founded in 2014 by CEO Romi Savova and chief technology officer Jonathan Lister Parsons. The board is led by former Prudential chief executive Mark Wood and includes Michelle Cracknell, who is former boss of the Pensions Advisory Service.

PensionBee's core target market is the estimated 40.8 million non-workplace and dormant workplace pension pots. As each consumer has approximately two pots, the company thinks this could mean there are more than 20 million individuals to target.

AIM will also get a tech stock flotation in the coming days after software provider ActiveOps confirmed plans for a listing that is expected to value the firm at £100 million.

The Reading-based company's management process automation platform is used by banks and insurance companies, including AIG and Standard Life, to manage office operations and staff workflows. The shift to home-working during the pandemic has highlighted the importance of its services, including ensuring that businesses continue to run their operations safely.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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