Sunak could have found a better company to praise than Deliveroo
R Ishi Sunak bet on the wrong horse. If the Chancellor wanted to promote the London Stock Exchange as a warm and loving place for 21st century smart companies, Deliveroo was the wrong company to hail it as "the true British Technology Success Story". A drop of the 26% on the first day of the share price for £ 7.6bn is chaos.
The main blame lies with Goldman Sachs and JP Morgan, who were responsible for the listing. Their numbers were horribly wrong. As the price range for stocks has been lowered this week, investment banks have released the misleading message that the stock order backlog has been "fully hedged". Well, of course it wasn't covered by the right people in the right amounts. Hedge funds, marginal buyers in such situations, sensed the weakness and sold out at the first opportunity.
An intriguing question is why solid support didn't materialize. Theory A says it was an old school UK fund manager revolt against alleged Deliveroo management abuses, such as increased voting rights for CEO and co-founder Will Shu.
To some extent, this factor probably played a role. Lord Hill's review of the trading system proposes to admit companies with unequal voting structures to the stock indices. Opponents hate the idea, seeing the underlying injustice and bad long-term consequences. Deliveroo gave the opportunity to express dissatisfaction.
But was that a major factor in upsetting your mood? It seems unlikely. A few British opponents (against a listing reform that has yet to happen, remember) would normally not be confusing on a global investment roadshow. Theory B sounds more plausible: Deliveroo was simply overcooked at £ 7.6 billion.
Therefore, the company should look in the mirror. Shu never convincingly answered the gig economy question: would Deliveroo's food delivery model work if passengers had to obtain contracts and regular work rights?
Instead, the company stuck firmly to the line that riders earn £ 13 an hour "in our busiest times", which is an exercise in the selective use of data. How much do they earn on average? Deliveroo lost £ 225m on an operating level last year. Investors wanted to hear vague assurances that profitability would not be out of reach forever if passengers were granted rights.
The company can take comfort in raising £ 1 billion of fresh capital. Shu can stop clumsy about 21 "meal occasions" in a week and go back to work, or he probably prefers things so much.
But Sunak should also lower his head. There are still some good tech companies in the UK - and many of them use technology for more uplifting purposes than delivering take-away meals on a bicycle. They don't need the accompaniment of the chancellor's hype when they enter the market. Hopefully most of them will find the chaotic nature of the Deliveroo swimmer a special case, which is arguably the correct way to view events. Whether it's technology or not, retailers shouldn't be greedy on price.
Bet 365 Denise Coates finally reaches a jackpot of £ 1 million a day
It was only a matter of time before Denise Coates, CEO of Bet 365, would have paid herself more than £ 365m in one year, and that was the moment. The total was £ 421m in the 12 months to last March. As subsequent accounts will cover the period of the pandemic that brought bored home workers a gift, there is a chance it will surpass the round £ 500m next time.
Coates is clearly running a skillful operation and, in its favor, is paying in a vanilla fashion through a UK based company, meaning it is a substantial taxpayer as well as a charitable donor. Others would already have moved to Monaco.
However, she is annoyingly shy about revealing where Bet 365 is making its money. The company never publishes a geographic breakdown of revenues as listed companies must. He clearly doesn't mind the allegations that he accepts bets from China, where people risk jail time for betting online.
Geo-secrecy limits the pool of potential buyers should Coates ever want to sell the business - or at least the sale price is lowered. It must therefore be assumed that there is neither float nor sale on the cards; only an annual series of extraordinary payouts.