Support for the Deliveroo floatation amongst institutional investors is diminishing, as the company’s long term profitability potential is questioned. The doubts centre on a business model dependent on low pay for ‘workers’, with social champion Marcus Rashford now joining the probe.
Yesterday Aberdeen Standard, Aviva Investors, BMO Global, and CCLA that collectively manage funds of circa £1.5 Trillion, all excluded themselves from acquiring shares in Deliveroo, citing the treatment of workers by Deliveroo as ‘unsustainable’.
M&G, Legal & General, and others have now also said they will boycott the floatation as fund managers question the company’s reliance on the self -employed status of delivery riders.
The risk for investors is that delivery riders could be classified as workers, in actions like the recent Uber case where its drivers won in a landmark UK supreme court case last month.
Large investment groups are also questioning the lack of shareholder ability to influence company policy, as founder and chief executive Will Shu will retain more than 50% of shareholder voting rights (control) post flotation.
With revenues up significantly from increased food delivery throughout the pandemic, Deliveroo lost £224 million in 2020. With a cost base of 50,000 low pay self – employed riders that could change in one court case, investors are stepping back from what they see as high risk.
The Bureau of Investigative Journalism in partnership with ITV News and The Daily Mirror are reporting on riders earning less than the national minimum wage, with some as low as £2 per hour. Deliveroo strongly contest the findings.
Deliveroo is a supporter of Manchester United footballer Marcus Rashford’s End Child Food Poverty Task Force, and Rashford is reportedly now seeking an urgent meeting with Deliveroo to discuss the way workers are treated. Rashford and End Child Food Poverty Task Force will no doubt question the ‘brand’ association.
As public opinion moves to being ever more mindful of corporate social responsibility, it is amplified by social champions like Marcus Rashford, investment funds courting their savings are equally mindful to follow that move.
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Hospitality & Catering News: Marcus Rashford joins institutional investors questioning Deliveroo floatation. – 26 March 2021 – Marcus Rashford joins institutional investors questioning Deliveroo floatation.
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