Investor backlash follows failed Deliveroo debut

Both investors and financial advisors have hit back at reforms planned for rules in UK listings that will help founders of firms control their enterprises, after international food delivery company Deliveroo’s recent failure launching its initial public offering (IPO).

The online food delivery firm, founded back in 2013 in London by Will Shu, has failed to gain the support of its home city’s biggest investors. Many London’s key investment management firms cited concerns regarding the firm’s dual class structure for shares among the reasons for sidestepping its recent IPO.

The delivery company’s shares plummeted by 26% during its debut effectively reducing its opening market capitalisation of £7.6bn by almost £2bn.

The United Kingdom is currently looking to update its established listing rules to enable enterprises that have dual class shares to receive admittance into the premium segment of the London Stock Exchange. Using this system, enterprise founders typically keep greater voting rights in comparison to minority investors.

Some financial advisors have expressed the opinion that UK investors were reticent to any structure that doesn’t feature a one vote – one share system. Those offering investment advice in Chester, London and other major UK cities have a duty to explain the implications of any potential investment with total transparency.

Despite the opinions of investment professionals, Deliveroo’s choice to set up an IPO on the London Stock Exchange was a decision endorsed by Chancellor Rishi Sunak, who has recommended several new reforms to ease the UK’s listing rules.

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