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New £3.90 to £4.10 range points to maximum valuation of £7.85bn, below initial £8.9bn

Deliveroo will price its highly anticipated initial public offering towards the bottom of its intended range because of what it called “volatile” market conditions, despite seeing “very significant demand” from investors.

The multibillion-pound listing has been held up as a big moment for European start-ups and for the London stock market, which has suffered a dearth of new tech listings in recent years. But Deliveroo is also facing a protest from several big UK investors who have refused to participate in what could be London’s biggest IPO in a decade over regulatory concerns.

Just a week ago, the London-based food delivery company said it intended to price its offering at between £3.90 and £4.60 per share, implying a market capitalisation of as much as £8.9bn — ahead of the $10bn (£7.2bn) valuation that had previously been mooted internally.

But on Monday morning, Deliveroo said it had narrowed that range to between £3.90 and £4.10, indicating a valuation of £7.6-7.85bn.

Deliveroo said it wanted to price “responsibly” to ensure “long-term value” for investors buying in at the IPO, which includes a £50m allocation for its own customers.

Final pricing will be determined on Wednesday morning, before it begins trading on the London Stock Exchange’s main market under the symbol “ROO”.

Last week, a backlash erupted among some of the UK’s largest asset managers — including the investment arms of Aviva, Aberdeen Standard and Legal & General — over Deliveroo’s business model, working practices and regulatory risk. A survey of more than 300 of its couriers by the Bureau of Investigative Journalism and the Independent Workers Union of Great Britain found that a third were paid less than the minimum wage.

But Deliveroo insisted on Monday that its conservative pricing decision was instead down to the poor performance of other IPOs and broader stock market volatility over the past week. It still plans to raise around £1bn from new stock issued in the IPO, while existing investors — including Amazon.com and Deliveroo founder Will Shu — are expected to together sell shares worth more than £500m.

“Deliveroo has received very significant demand from institutions across the globe,” Deliveroo said. “The deal is covered multiple times throughout the range, led by three highly respected anchor investors. Given volatile global market conditions for IPOs, Deliveroo is choosing to price responsibly within the initial range and at an entry point that maximises long-term value for our new institutional and retail investors.”

After a strong start to 2021 for new listings, especially among so-called “blank-cheque” firms in the US, choppy trading conditions did not deter more companies from unveiling their plans to go public last week, including WeWork and software company UiPath.

But last week’s IPOs have so far underwhelmed. Zhihu, a Chinese question-and-answer site, fell 11 per cent on its first day of trading in the US on Friday, while cloud computing provider DigitalOcean ended the week 11 per cent below Wednesday’s IPO price.

Shares in Trustpilot, the most recent tech company to list in London, initially surged when they first began trading on Tuesday morning but by Friday had closed flat on their 265p offer price.

DoorDash, the food delivery group that is Deliveroo’s closest comparator in the US, saw its shares jump more than 80 per cent from their $102 IPO price on their first day of trading in December. But after topping out above $200 in mid-February, DoorDash shares have lost a fifth of their value over the past month, closing at $134 on Friday.

The deal values the protein-analysis company at around $1.25 billion

A special-purpose acquisition company focused on life sciences and backed by a well-known shareholder activist is nearing a deal to merge with protein-analysis company SomaLogic Inc., according to people familiar with the matter.

CM Life Sciences II, CMIIU 3.37% a SPAC backed by Keith Meister’s Corvex Management LP and life-sciences investor Casdin Capital LLC, could finalize a merger with SomaLogic that values the company at around $1.25 billion as soon as Monday.

The deal has the additional backing of a prominent group of investors, including SoftBank Group Corp. subsidiary SB Management, Cathie Wood’s ARK Investment Management LLC and gene-sequencing company Illumina Inc., who will supply SomaLogic with a $375 million private investment in public equity as part of the deal, the people said.

Together with the nearly $300 million CM Life Sciences II raised in a February initial public offering, the deal being discussed would provide SomaLogic with roughly $650 million in cash, they said.

It is a typical arrangement in SPAC deals, which have become all the rage on Wall Street. The vehicles, also known as blank-check companies, raise funds in an IPO even though they don’t have a business. They then hunt for one to join up with in a deal that hands the target company a listing in what is seen as a faster and cheaper route to the public markets than an IPO.

They have been embraced by startups in hot industries that represent more speculative bets for investors.

SomaLogic, founded in 2000, is one of a handful of companies focused on the potential of proteomics, the study of proteins. Tens of thousands of proteins play vital roles in the human body and their levels fluctuate as a result of aging and other circumstances. While researchers have long seen the potential of protein diagnostics to simplify routine tests or identify and treat disease, they haven’t been widely adopted due to a dearth of investment and the complexity of drawing useful conclusions from the rapidly changing data.

SomaLogic, headed by Dr. Roy Smythe, currently tests for 7,000 proteins in one blood draw—more than rivals—and hopes to add thousands more in the coming years. Its current tests perform functions like testing liver fat and cardiorespiratory fitness. Its customers, mainly pharmaceutical companies like Novartis AG and researchers, can also gain insights from automated analysis of SomaLogic’s database of samples.

There has been a flurry of recent deal activity in proteomics, with Sweden’s Olink Holding AB and Seer Inc. going public, and Nautilus Biotechnology Inc. and Quantum-Si Inc. both agreeing to merge with SPACs.

Exact Sciences Corp. Chief Executive Kevin Conroy, who sits on CM Life Sciences II’s board, is expected to remain on the combined company’s board, the people familiar with the matter said.

Casdin’s Eli Casdin and Mr. Meister are childhood friends from the New York area who in February agreed to merge their first SPAC with a genomic- and clinical-data company, Sema4.

Mr. Meister, who worked closely with famed investor Carl Icahn before launching Corvex, was one of the first investors in Mr. Casdin’s investment firm.

Bond issue to fund takeover of fossil fuel assets criticised for environmental claims

Financier Wes Edens, a part-owner of Aston Villa football club and the Milwaukee Bucks basketball team, has raised the hackles of green investors after borrowing $1.5bn to fund his gas infrastructure group’s takeover of another fossil fuel operation that it says will help accelerate the world’s transition to clean energy.

The funds will in part finance the acquisition by Edens’ New Fortress Energy of Golar LNG Partners at a $1.9bn enterprise value, which the company says will add ships to transport gas as part of a bigger deal to expand into Brazil.

In marketing the deal to investors last week Edens, who co-founded the $50bn fund manager Fortress Investment Group and set up New Fortress Energy in 2014, touted the company’s commitment to clean energy, while simultaneously outlining plans to expand its global liquefied natural gas business, according to people familiar with the presentation.

The LNG industry offers itself as an alternative to other fossil fuels, on the basis that gas emits less carbon dioxide than oil or coal in combustion. Advocates say it offers a bridge while renewable energy scales up, particularly in countries otherwise dependent on coal and oil.

However, natural gas is mainly made up of methane, a potent greenhouse gas that traps more heat in the atmosphere than a molecule of carbon dioxide and contributes to global warming. Gas production, storage and transport are prone to methane leakage. “While methane tends to receive less attention than CO2, reducing methane emissions will be critical to avoid the worst effects of climate change,” the International Energy Agency said in its 2020 gas report.

“We don’t think that natural gas is the best friend for the transition. It’s the coal of tomorrow,” said Charles Portier, a portfolio manager at Mirova, a climate-focused investment management subsidiary of Natixis. “Natural gas is a fossil fuel . . . Natural gas is dangerous.”

A spotlight has been thrown on the issue this month with the EU considering the inclusion of gas in its new taxonomy for sustainable finance. The EU-wide classification system is designed to provide companies and investors with a common framework for identifying to what degree economic activities can be considered “environmentally sustainable”.

While the New Fortress fundraising is not classed as a green or sustainable bond — a designation that comes with reporting requirements to ensure the money is spent on green or sustainable projects — the company highlighted its environmental benefits when it marketed the deal to investors.

New Fortress says it eventually aims to replace fossil fuels with “affordable zero-emissions hydrogen”, despite its core assets being in natural gas.

“From seamlessly converting or building your gas-fired facilities, to reliably and efficiently providing you with clean, affordable natural gas, we can help you save time, money, stress, and even the environment — all by using liquefied natural gas,” the company says on its website.

New Fortress said it provided affordable power and “cleaner fuels” to markets that were reliant on dirty, expensive and volatile oil-based fuels. It highlighted operations in Jamaica and Puerto Rico that enabled the conversion of existing power generation from diesel to natural gas, which it said had reduced CO2 emissions by 30 per cent and lowered fuel costs to accelerate investments in renewables.

“With our projects in Mexico, Nicaragua, Brazil and other markets, we anticipate even more impactful emissions reductions and fuel savings for customers who would otherwise rely on oil-based fuels,” it said in a statement.

Among investors that have been drawn into previous New Fortress bond issues is BlackRock’s $450m global high-yield ESG and credit screened fund, which takes into account companies’ effect on the environment. The fund prohibits investment in coal companies, but does not explicitly mention natural gas and invested in New Fortress’s bond issue last year.

“I don’t think that you could say [LNG] is green,” said Helen Wiggs, head of corporate climate at responsible investing group ShareAction. “Coal to clean works faster, and causes less environmental damage along the way, and stops unnecessary investment in [fossil fuel] infrastructure.”

Even investors without a strict ESG mandate said New Fortress had benefited from the growing allure of environmentally friendly investments. “They are trying to play the green idea,” said one bond fund manager. “It’s smart.”