Inevitably, it’s via one of those “blank cheque” special purpose acquisition companies. Alex Chesterman of LoveFilm and Zoopla fame is taking his latest creation to New York’s stock market. London’s investors will, though, be denied the chance to buy shares in Cazoo, the online retailer of second-hand cars. Chesterman favours US investors for Cazoo An outbreak of (relative) restraint on price was necessary. Stock market investors accept a bit of price inflation at IPO, but Deliveroo’s backers were pushing their luck in aiming quite so high so soon. Third – and most importantly – Deliveroo was valued closer to £5bn in a private fundraising round as recently as January. The warm-up to the float has shown that the debate about fair pay in the gig economy will run and run. Aviva Investors, Aberdeen Standard and BMO may not be the prime targets for the float, but those big funds’ scepticism about the long-term sustainability of Deliveroo’s model can’t be ignored. Second, Deliveroo has done a poor job of defending its “piecework” approach to paying riders. Still, a dab on the brakes is the right decision for three reasons.įirst, the one that Deliveroo mentioned: a few US tech IPOs had soggy launches last week, which dampens the general mood. What a shame it didn’t tell us earlier that the top of the range was irresponsible. After pushing its luck, Deliveroo is right to dab on the brakesĭeliveroo says that, in pricing its flotation, or IPO, at the bottom end of the original £7.6bn-£8.8bn range, it is acting “responsibly”. If some banks’ risk-control departments have been asleep, there is potential for trouble. ![]() Stock markets are displaying pockets of extreme valuations, at least by historical standards. But let’s see what the next few weeks brings as every big investment bank in the world checks its hedge fund exposures. Markets were calmer than expected on Monday and, for now, the theory that Archegos is a one-off is intact. It rather suggests nobody truly believed in the rally. ViacomCBS’s shares, note, had trebled in three months and the specific problem began only when the company tried to raise fresh capital at the higher level. ![]() The worry, though, is that this example of stupid risk-taking – on the part of Bill Hwang’s Archegos and the lenders – is a sign of wider delusional thinking. ![]() For Credit Suisse, confessing to a “highly significant and material” impact on first-quarter numbers, it’s another humiliation to add to its central role in the Greensill debacle.Īs things stand today, the whacks to Credit Suisse and Nomura, whose shares fell sharply, are mainly of concern to their own investors. And another familiar element is that Goldman Sachs and Morgan Stanley, representatives of old Wall Street, were quicker to smell trouble and escaped with minimal damage in their own capacity as prime brokers. As so often, the use of derivatives contracts may have obscured the true levels of financial leverage being deployed.
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