US food delivery giant DoorDash, with GIC among its investors, in $3.8b IPO

The San Francisco-based company said in a filing on Nov 30 that it plans to sell 33 million shares for US$75 to US$85 each. PHOTO: REUTERS

NEW YORK (BLOOMBERG) - DoorDash, the biggest US food delivery company, is seeking to raise as much as US$2.8 billion (S$3.8 billion) in an initial public offering (IPO) that's part of an end-of-year US listings rush.

The San Francisco-based company said in a filing on Monday (Nov 30) that it plans to sell 33 million shares for US$75 to US$85 each. At the top end of this range, the company could be valued at about US$32 billion. This valuation is an increase from when private investors valued DoorDash at about US$16 billion in June. The company's IPO price range could still change depending on demand for its stock on its roadshow with investors over the next week.

After the listing, co-founder and chief executive officer Tony Xu will hold almost 42 per cent of DoorDash's Class B super-voting shares, which have 20 votes each. He also has voting control over the rest of the 20-vote shares, which are split between his co-founders, Stanley Tang and Andy Fang. They will control about 79 per cent of the voting power, according to the filing.

SoftBank Group's Vision Fund will be the largest outside investor, with 25 per cent of the Class A shares. Venture capital firm Sequoia will own more than 20 per cent and Singapore's GIC will own 10.5 per cent, according to its filings. That will add up to less than 16 per cent of the voting power because of the Class B shares held by the founders.

DoorDash is currently planning to hold the IPO on Dec 8, with its trading debut on the New York Stock Exchange the following day, said a person familiar with the matter who asked not to be identified because it wasn't public. A representative for DoorDash declined to comment on that timing.

DoorDash is part of a cadre of consumer-oriented, web-based companies led by home-rental platform Airbnb that have lined up IPOs for December. The group includes video-game company Roblox, installment loans provider Affirm Holdings and ContextLogic, the parent of online discount retailer Wish.

Pandemic Boom

DoorDash has seized on the pandemic-fueled boom in demand for meals brought to your door, as well as investor exuberance over new stock listings as it moves ahead with its IPO.

When the company filed its prospectus earlier this month, it revealed a sharp jump in revenue this year and more surprisingly, a profitable quarter.

For the first nine months of the year, DoorDash had US$1.9 billion in sales, more than triple the US$587 million during the same period last year. Its net loss narrowed to US$149 million, compared with US$533 million for the period in 2019.

DoorDash was briefly profitable in the second quarter of this year - at the height of the stay-at-home orders in major US cities -- posting US$23 million in profit.

DoorDash's listing plans - along with the entire app-based service industry - got a boost in November, when California voters approved a ballot measure setting aside a state law requiring gig-economy companies to treat their drivers more like employees than contractors. Despite that victory, the company indicated in its filing that it could face further regulation or litigation that would affect its ability to keep its workers as less costly independent contractors.

DoorDash's offering is being led by Goldman Sachs Group and JPMorgan Chase & Co, with Barclays, Deutsche Bank, RBC Capital Markets and UBS Group. DoorDash is planning to list its shares under the symbol DASH.

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