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Deliveroo pledges £50m COVID recovery fund ahead of multi-billion pound IPO

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Suban Abdulla
·3 min read
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Deliveroo curriers seen in Dublin city center during Level 5 Covid-19 lockdown. 
On Wednesday, 3 February, 2021, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images)
The news comes as the company announced it had chosen to list in London, in an initial public offering (IPO) which could value the company up to $7bn (£5bn). It is expected to float on the stock market as early as Monday 8 March. Photo: Artur Widak/NurPhoto via Getty Images

Deliveroo will set up a £50m ($70m) coronavirus recovery fund to help struggling restaurants post-lockdown.

The news comes as the company announced it had chosen to list in London, in an initial public offering (IPO) which could value the company up to $7bn (£5bn). It is expected to float on the stock market as early as Monday 8 March.

Additionally, the fund will also pay for meals for vulnerable people and allow Deliveroo's around 50,000 UK riders to buy electric scooters.

The pandemic recovery fund will sound good to the government, after chancellor Rishi Sunak, on Thursday welcomed Deliveroo's plans to list in London.

Sunak also announced reforms to loosen City listing rules. The chancellor's plans will allow "dual-class" listings, which will enable founders to greater control even after their companies go public.

Rumours of a listing have been circulating since September. At the time, it was reported people familiar with the matter had said discussions were in their preliminary stages.

The company had raised $180m from its investors, including from minority stakeholder Amazon (AMZN). Deliveroo also said at the time it had beefed up its board with the appointment of Simon Wolfson, the former chief of retailer Next (NXT.L), as a non-executive director, a move that was widely seen as IPO preparation.

In a rare move, the float is expected to open up to its customers while their couriers could also be offered financial rewards as part of the deal.

READ MORE: Deliveroo wants Eat Out to Help Out scheme to make a comeback

Deliveroo’s heavy investment in technology led to a loss of £319.9m in 2019, which forced the company to take out a short-term £198m loan to mitigate the losses.

But since then, the coronavirus pandemic saw a significant rise in appetite for online food delivery. This supercharged Deliveroo, more than doubling its revenues in the UK and Ireland and pushing it into operating profitability during the second and third quarters of 2020.

Last month, the delivery firm urged the government for a return of the Eat Out to Help Out scheme once the hospitality sector is allowed to open its doors, in a letter to the prime minister that has also been signed by 330 other restaurants.

The letter, signed by the likes of itsu, Pizza Hut and Shake Shack (SHAK) among others, said the scheme had been crucial in allowing restaurants to survive last year.

“The boost the scheme provided not only helped protect restaurants from closure but also showed customers the work we have done to make sure they are safe and can get back to enjoying great food. We encourage the Government to consider a rerun of this innovative scheme when it is safe to do so,” the letter said.

WATCH: Deliveroo plans $7bn London share listing