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DoorDash reports surge in lockdown revenue in IPO filing



Soaring demand during the pandemic allowed food delivery app DoorDash to post revenues of $1.9bn for the first nine months of 2020, helping narrow its losses as it unveiled financial figures for the first time ahead of its hotly anticipated initial public offering.

In its prospectus, published on Friday, the US-based company provided a detailed accounting of its business model, as it attempted to convince investors of its prospects in a sector that has been marked by steep losses and consolidation.

During the pandemic, DoorDash’s revenues increased more than 200 per cent, up from $587m in the same period in 2019. The company said it now had 18m active users of the platform, which currently operates in the US, Canada and Australia, along with 1m workers providing its service.

DoorDash reported that it was profitable on an adjusted earnings basis, before including interest, taxes, depreciation and amortisation, making $95m on that basis to September this year. It also reported net income of $23m in the second quarter before reversing into losses in the third quarter.

The company is aiming to be valued at more than $20bn in the IPO and begin trading in December, according to people familiar with its plans. It will list under the symbol “DASH” on the New York Stock Exchange.

“We believe that our business will be successful and sustainable in the long term as our business model becomes more efficient, through increasing scale and continual operational improvements, and as our sales and marketing and promotions investments normalise,” DoorDash wrote in the prospectus.

Line chart of Indices rebased to peak, 7-day moving average* showing Pandemic has led to a steady rise in food delivery

DoorDash’s IPO comes after a turbulent year for the meal delivery sector, which has undergone consolidation even as user demand has surged during lockdowns.

“It really looks like they’re knocking on the door of sustained profitability,” said Asad Hussain, mobility sector analyst with PitchBook. “We think there’s a long runway of growth ahead of them. We think these shifts in consumer behaviour are going to be consistent.”

This week, Uber received regulatory approval in the US for its $2.7bn acquisition of Postmates, which is expected to bolster the company’s position in the Los Angeles market. The ride-sharing group has yet to report a profit in its food delivery business.

Uber and DoorDash previously discussed a merger last year at the behest of their common shareholder, SoftBank’s Vision Fund, but eventually walked away from the talks, the Financial Times had reported.

DoorDash’s losses narrowed to $149m on revenues of more than $1.9bn through the third quarter this year, compared with losses of $533m on revenues of $587m during the same period last year. It held more than $1.6bn in cash and cash equivalents at the end of September.

Data from Edison Trends showed DoorDash commanded 48 per cent of the US food delivery market in October, up from 34 per cent a year prior. That made it the market leader ahead of a combined Uber and Postmates, which would represent about 35 per cent of business, according to the data provider.

Line chart of US food delivery market share by transactions (%) showing DoorDash stretches lead over rivals

The company said it had 5m users of its $9.99 DashPass subscription service, though did not break out how many of those were part of free trials.

Among its risk factors, DoorDash notes an unpredictable regulatory environment over its classification of workers as independent contractors. 

DoorDash was among the five gig economy companies that contributed to the $200m fund supporting a recent California ballot measure legalising independent contractor status for its workers. The company, along with its rivals, said it would now look to push similar regulation nationwide.

The filing listed 18 separate ongoing legal challenges related to employee classification. It added that DoorDash had agreed to pay $89m to settle a class-action lawsuit involving workers in California and Massachusetts — up from the initial proposed settlement of $41m. 

Separately, more than 35,000 workers had filed, or signalled an intention to file, arbitration claims over employment status. The company said it “reached agreements that would resolve the worker misclassification claims of a large majority of these individuals”. The cost of doing so would be approximately $85m, including legal fees, the company said.

The company also warned that its multi-class stock structure will concentrate voting power with chief executive Tony Xu.

DoorDash’s IPO comes as other large venture-backed companies, such as vacation rental marketplace Airbnb, prepare to go public before the end of the year, capping one of the busiest periods for new US listings.

SoftBank’s Vision Fund owns nearly one-quarter of DoorDash’s class A common stock, while the venture firm Sequoia Capital owns more than one-fifth, placing them in line for big paydays once the company goes public. DoorDash was most recently valued at $16bn by private investors in June.

Goldman Sachs and JPMorgan are serving as lead underwriters on the offering.

Additional reporting by David Carnevali in New York

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IPOs / FFOs’s logistics arm seeks to raise up to $3.4bn in Hong Kong IPO




JD Logistics, the delivery unit of Chinese ecommerce group, will seek to raise up to $3.4bn in what would be one of Hong Kong’s largest initial public offerings this year.

The company’s decision to list follows a boom in online shopping during the coronavirus pandemic. But a tougher regulatory environment for Chinese technology groups and a recent fall in the shares of SF Holding, one of JD Logistics’ largest competitors, pushed the company’s proposed IPO price down by about a quarter, according to a person close to the deal.

JD Logistics will sell 609.2m shares at HK$39.36-HK$43.36 ($5.07-$5.58) each. The final price will be set on Friday and the shares are expected to start trading on May 28, according to terms of the deal seen by the Financial Times.

The IPO would be the second largest in the city this year after Kuaishou, a Chinese viral video app, raised $5.4bn in February, and would be the third blockbuster listing by in Hong Kong in the past year. JD Health, which sells pharmaceutical and healthcare services online, completed a $4bn IPO in December and carried out its own secondary listing in the territory last June, which raised a similar amount.

Hong Kong has benefited from a flood of high-profile listings by Chinese technology companies in recent months and has hosted more than $20bn of IPOs this year, according to data from Bloomberg. created its logistics and delivery arm in 2007 and spun it out into a standalone unit a decade later. The company operates more than 900 warehouses in China and provides delivery and warehousing services to third parties.

But the group is among those under pressure as China increases scrutiny of its largest internet groups. Last month, officials told 13 of the country’s biggest tech companies, including fintech subsidiaries of, Tencent and ByteDance, to “rectify prominent problems” on their platforms. The push was seen as a sign that regulatory focus on the sector was spreading beyond Jack Ma’s Ant Group, after the $37bn IPO of the fintech company was scuppered last November.

Separately, shares in SF Holding, China’s largest listed delivery company, fell sharply last month after a quarterly loss rattled investors and prompted scrutiny over the high valuations placed on Chinese companies.

“Competition in China’s logistics space is fierce, especially after [Indonesian company] J&T Express entered the market, which has had an impact on other logistics companies’ performance and will hit JD,” said Li Chengdong of Haitun, an ecommerce think-tank.

JD Logistics was initially the delivery arm of’s ecommerce site but an increasing portion of its business comes from ferrying packages on behalf of third parties.

Cornerstone investors in the JD Logistics IPO, including technology group SoftBank’s Vision Fund, Temasek Holdings, Singapore’s state-backed investment company, and investment firms Tiger Global and Blackstone have subscribed to about $1.5bn of the shares, according to the terms of the deal.

Bank of America, Goldman Sachs and Haitong International are the joint sponsors for the listing.

Additional reporting by Ryan McMorrow in Beijing

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Volvo Cars: race to net zero marks revival of IPO plan




Volvo Cars has been waiting at the lights for years. The Swedish carmaker’s journey back to the stock market was halted in 2018 when Chinese owner Geely scrapped flotation. A subsequent plan to merge and float the two businesses was dropped in February. Now the company is considering an initial public offering. Getting a green signal will require a sensible price.

The last IPO plan stalled when investors baulked at the $30bn sought by Geely. Volvo has advanced since then, particularly on electrification. Shares in peers such as Daimler, BMW, Stellantis and VW trade on an average trailing enterprise value-to-ebitda multiple of 9. If Volvo achieved the same, it would have an enterprise value of almost $20bn, using figures from S&P Capital IQ. The company is likely to argue that its success in China merits a higher valuation. But its operating profit margins are about half those of peers. 

Profitability should improve, as battery advances cut the cost of making electric cars. But Volvo has already benefited from a supportive owner. Geely, which paid $1.8bn in 2010 to buy Volvo from Ford, has given it access to funds and shared the capital costs of developing new platforms. That helped the return on capital shoot up to an average of 9 per cent over the past six years, well above that of BMW and VW. 

A lot depends on continued collaboration with Geely. An outright merger was deemed too complicated because the complexity of the ownership structure made it difficult to agree a price acceptable to Geely’s minority shareholders. But the Chinese company will retain a big stake. The two businesses will jointly own the legacy internal combustion engine business and each owns half of Polestar, the premium electric brand. 

Polestar aims to produce the first genuinely net zero car by 2030. That, and other goals, means that Volvo has some of the most ambitious climate plans in the car industry. Those green credentials could add some extra oomph. Even so, too racy a valuation will impede its chances of a successful float.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Click here to sign up

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Commodities broker Marex looks to list on London Stock Exchange




One of the brokers with rights to trade on the historic trading floor London Metal Exchange is heading for an initial public offering as commodity markets enjoy the biggest boom since the early 2000s.

Marex, a brokerage controlled by two former Lehman Brothers investment bankers, said on Friday it was considering listing on the main market of the London Stock Exchange.

Should it proceed, Marex said the offer would consist of a sale of shares by existing investors and that it was aiming for a free float of at least 25 per cent, meaning it would be eligible for inclusion in widely followed FTSE indices.

London-based Marex employs about 1,000 people and is one of nine members of the Ring, the LME’s historic open outcry trading floor that is now threatened with closure after more than 140 years. It has a 16 per cent market share on the LME.

The company is controlled by JRJ Group, a private equity firm founded by Jeremy Isaacs, the former head of Lehman’s European operations, and Roger Nagioff, the bank’s ex-head of global fixed income.

JRJ has a 41 per cent indirect economic interest in Marex. It is expected to reduce that stake through the London IPO although it will remain a large shareholder.

People familiar with the plans said Marex was seeking a valuation of $650m-$800m. The company is about half the size of US rival Stonex Group, which has a market capitalisation of almost $1.4bn. The IPO could come as soon as June.

The company, which has been expanding aggressively through acquisitions, made pre-tax profits of $55m in the year to December, up from $46.6m a year earlier, on net revenue of $414.7m.

However, in 2018 pre-tax profits were just $13.4m after Marex took $31.9m of legal provisions related to a warehouse receipts fraud.

Marex makes more than half its revenue from commodity hedging services that help big commodity producers, consumers and traders manage price risk. Commissions from the group’s top 10 clients increased by 17 per cent to $49m in 2020.

“The attractiveness and resilience of our business model is demonstrated by our latest set of results, which showcase continued strong performance despite the obvious macro headwinds,” said Marex chief executive Ian Lowitt, who was paid $4m last year. His basic salary is almost twice that of the LSE’s CEO David Schwimmer.

JRJ Group and its partners Trilantic Capital Partners and BXR Group acquired a majority stake in Marex in 2010. A year later it bought Spectron to create one of the biggest commodity brokers in the world. The company has been up for sale for several years as JRJ has sought an exit from its investment.

It emerged in November that Marex had appointed Goldman Sachs and JPMorgan to help advise on a possible stock market listing. One of its no- executive directors is Stanley Fink, former CEO of hedge fund Man Group.

Marex said on Friday that acquisitions and expanding into “adjacent products” would continue to form a “central pillar of its strategy”. In November, Marex acquired Chicago-based equity derivatives firm XFA.

Commodity markets have boomed over the past year on the back strong demand from China, a post-pandemic pick up in other big economies and bets on the “greening” of the world economy.

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