Daily Business Live
Deliveroo flops; Parsley Box dragged lower; retail prices fall
REFRESH PAGE FOR UPDATES
4.30pm: Deliveroo and Parsley Box fall
Shares in courier business Deliveroo collapsed on their first day of trading, leaving investors nursing huge losses.
Deliveroo closed at 287.5p, having been priced at 390p.
Edinburgh-based Parsley Box, the food delivery service, was also dragged lower, closing at 185p from a pre-float price of 200p and an opening price of 210p. They hit an early peak of 211p before falling back.
It’s likely they were pulled lower by the adverse reaction to Deliveroo.
The FTSE 100 closed 58.49 points lower at 6,713.63.
11.30am: More reaction to Deliveroo flotation
Professor John Colley, associate dean of Warwick Business School, said: “It is little surprise that investors’ appetite is limited for the Deliveroo IPO. It is a narrow margin loss-maker that is likely to face higher costs due to workers’ rights across Europe. There are also concerns as to whether this type of business model can ever return much profit. It would have to deliver a lot of meals at high margins of which there is no sign yet.
“Another major issue may well be the governance concerns relating to founder shares voting power. In the UK investing institutes are more concentrated and are used to having a say in changing management if a business is badly run. So being lumbered with a founder they can’t shift however bad the performance will not go well.
“A number of potentially very large investors decided to sit this one out. Those who invested for the price ‘pop’ have paid the price in losses. This does not augur well for future tech or gig economy launches in the UK. Nor indeed SPACs which again are likely to be seen as poor value and high risk by late investors in the UK.”
9.30am: Deliveroo flops
Shares in the food delivery service fell as much as 20% on their debut, down from the 390p flotation price to about 271p. They were trading at 297p at 9.30am.
Russ Mould, investment director at AJ Bell says: “Initially there was a lot of fanfare about the Amazon-backed company making its shares available to the public, including the ability for customers to buy stock in the IPO offer.
“Sadly, the narrative took a turn for the worst when multiple fund managers came out and said they wouldn’t back the business due to concerns about working practices.
“This is likely to have spooked a lot of people who applied for shares in the IPO offer, meaning they are racing to dump them.
“The fact Deliveroo’s shares were priced at the bottom of the range it had previously set out would suggest institutional investors were only prepared to buy stock if they got them at a discount.
“With Deliveroo, one must question if the knee-jerk reaction we saw at the market open is simply a short-term issue and if investors who like the long-term growth opportunity will flock to buy stock at the even cheaper price, given how the shares have fallen more than 20% on their market debut.
“There are multiple ways of looking at the business. Bulls will say the pandemic has made online food ordering part of everyday life and this trend will remain intact once life returns to normal. Bears will say it is a highly competitive space, Deliveroo doesn’t make any money and that takeaway ordering volumes will ease once the pandemic ends.
“Fast growth jam tomorrow shares are no longer in fashion as investors now prefer lowly-valued stocks that offer jam today. That meant Deliveroo was already fighting a headwind as soon as it hit the stock market.”
9.15am: Semichem stores closing
Health and household goods retailer Semichem, owned by Scotmid Co-operative, is closing up to 22 stores across Scotland, Northern Ireland and the North East of England.
8.15am: Deliveroo and Parsley Box below float price
Deliveroo shares opened at 331p, well below the 390p flotation price, and fell to 276p in the first half hour of trading (see below).
Shares in Scottish food delivery firm Parsley Box rose to 211.8p from a flotation price of 200p as they made their debut on AIM. After the first half hour they were trading at 196p.
The FTSE 100 was trading at 6,757.25, down 14.87 (0.22%).
7am: Scotgold placing
Scotgold Resources, which is developing a gold mine near Loch Lomond, has raised £1.5 million before expenses through a placing at 70p per share.
The company has deferred the target date for the completion of the planned Phase 2 expansion until September 2022, compared to the previous target date of May 2022.
7am: Television commission
Two Cities Television, a Belfast-based television production company, has been commissioned by BBC One to produce a police drama series created by the writers of The Salisbury Poisonings.
STV acquired a minority stake in Two Cities in January 2020.
Oil and gas explorer Parkmead has agreed in principle to become operator of the Platypus gas project in the southern North Sea, subject to regulatory approval.
It has entered into advanced commercial discussions with the Platypus supply chain, as well as progressing discussions with the OGA and also Perenco UK, in their role as operator of the Cleeton host facility.
Parkmead is actively evaluating further acquisition opportunities in each of its areas of activity – renewables, gas and oil. It reported half year revenue of £1.5 million (2019: £2.1m).
Firms debut on stock market
Deliveroo will become London’s biggest listing in a decade when it makes its stock market debut today, valued at £7.59 billion.
The final capitalisation, equivalent to 390p per share, is at the bottom end of the courier firm’s pricing range following an investor backlash over staff working conditions.
Big funds including Aberdeen Standard Investments, Aviva Investors and M&G have decided not to invest.
Dealings in Scottish food delivery firm Parsley Box will begin on AIM priced at 200p per share, valuing the company at £83.8m.
Retail prices fall
Shop prices fell by 2.4% in March, the same rate of decline as in February, as retailers endured the last full month of lockdown, with the non-food sector worst-hit, according to the British Retail Consortium-Nielsen tracker.
Helen Dickinson, chief executive at the British Retail Consortium said: “Unfortunately, many retailers may not be able to sustain these low prices in the coming months.
“Rising global food prices, at their highest since 2014, as well as increased oil prices and shipping costs, and Brexit red tape will likely begin to filter through, pushing up prices at tills.
“Government must ensure that new checks and documentation requirements this autumn avoid introducing significant friction on the import of goods, otherwise British consumers will end up paying the price.”
Global equity markets
Wall Street ended lower overnight as higher yields weighed on tech shares, but financial stocks rose helped by signs the fallout from the Archegos meltdown would be largely contained.
The Dow Jones Industrial Average ended Tuesday’s session down 0.31% while the S&P 500 dropped 0.32% and the Nasdaq fell 0.11%.
Japan’s Nikkei slipped 0.82% as the country’s industrial output fell in February because of declines in the production of cars and electrical machinery. Hong Kong’s Hang Seng fell 0.48%.
Oil – Opec meeting
Investors shifted focus to the OPEC+ ministerial meeting on Thursday, when analysts expect the group to extend supply curbs.
Brent crude fell 84 cents, or 1.3%, to settle at $64.14 a barrel while West Texas Intermediate US oil ended the session down $1.01, or 1.6%, at $60.55 barrel.
Ships were moving through the Suez Canal again a day after tugs refloated the Ever Given container carrier, which had blocked the passage for almost a week. The backlog of 422 ships could be cleared in three to four days, the canal’s chairman said.