Ex-LSE boss Xavier Rolet on Deliveroo stumble: ‘Cynics make the worst investors’

The former head of the London Stock Exchange signalled media “cynics” are to blame for Deliveroo’s disappointing share debut and compared the company’s flop to Ocado’s stumbles when it listed about a decade ago.

The highly-anticipated Deliveroo IPO, one of the largest in the UK for over a decade, was overshadowed by large institutional investors shying away from the food delivery firm, citing concerns over workers’ rights. The shares slumped more than 30% in early hours of London trading.

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“The Deliveroo IPO reminds me of the wave of cynicism and criticism directed at Ocado at the time of its IPO,” Rolet told Financial News. Ocado had one of the worst ever debuts on the London Stock Exchange when it listed in 2010. “This did not prevent this remarkably innovative company from becoming a major success.”

“Cynics do make the worst investors,” he continued. “But their outsize influence in the London press does highlight one simple fact: Whilst it is a positive development that after so many years of asking, the FCA’s mandate now includes consideration for the attractiveness of our markets, it does not obviate the need for a deep pool of investors and analysts who do understand growth and know how to price it.”

“On that basis, we still have our work cut out for us to catch up with the US,” he added.

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Rolet, who led the London Stock Exchange Group for eight years until his departure in 2017, has previously said that the proposals by Lord Hill for overhauling the UK listings market have long been needed to make the City more competitive.

Deliveroo’s listing casts a cloud over London’s ambitions as a top financial hub. The proposals, released by the Treasury on 2 March, were hailed as a way to bolster London in the wake of Brexit. The recommendations included liberalising rules around special purpose acquisition companies, giving company founders more voting rights after a float and reducing the proportion of shares that need to be listed from 25% to 15%.

The UK has struggled to attract high-growth companies to its capital markets, particularly compared to the much larger US market. In 2020, 57% of US IPOs were of high-growth or technology companies, according to think-tank New Financial, compared to just 27% in the UK.

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The boom of so-called Spacs in the US has made the declining number of IPOs in Europe less of a pressing debate than in recent years.

Rolet told FN earlier this month: “A full re-calibration of the regulatory and fiscal framework pertaining to our equity markets is needed to ensure they are fit for purpose to fulfil their primary mission: Scaling up the promise of world-class scientific innovation our entrepreneurs are bringing into the world.”

To contact the author of this story with feedback or news, email Trista Kelley

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