City grandee Peter Hargreaves hits out at Deliveroo’s sale of shares at its disastrous flotation, saying company took small investors for a ride
Critic: City titan Peter Hargreaves
Billionaire City grandee Peter Hargreaves has hit out at Deliveroo’s sale of shares to ordinary investors at its disastrous flotation, which has left them locked into keeping hold of their shares and nursing painful losses.
The founder of the investment supermarket Hargreaves Lansdown criticised the City for only wooing so-called ‘retail’ investors when stock market listings are going awry.
Loss-making Deliveroo was forced to price its shares at the bottom end of its publicised range last week, valuing it at £7.6billion.
But then a further £2billion was wiped off the company’s value on the first day of trading on Wednesday, making it one of the worst flotations in the City’s history.
Deliveroo is one of a few listings open to individual investors – usually they are only open to corporate buyers. It offered up to £50million of shares to its six million customers, and about 70,000 snapped up a maximum of £1,000 each.
But a ‘conditional’ period, which restricts trading when a stock lists for the first time, means they are locked in until April 7 despite the plunging share price.
But the investment veteran also told The Mail on Sunday that the City only offers individuals the chance to snap up a so-called initial public offering when ‘it’s hard to sell the shares’ at the planned price.
He said banks that help a company to float ‘hate making retail offers’ and prefer ‘a quick and easy’ sale to large corporate investors.
‘A new issue is always exciting – it gets lots of publicity. I could imagine one of the reasons they did it is because they thought they would get a better share price,’ he said of the decision to sell Deliveroo stock to small investors.
‘A good rule of thumb is leave them alone. Only when all IPOs are offered to the general public will there be a fair market.’