Deliveroo has seen the UK’s largest fund manager Legal & General become the latest major investor to shun its IPO amid concerns of its treatment of workers.
According to the Financial Times, Legal & General has joined M&G, Aberdeen Standard Investments and Aviva Investors in announcing its intention not to participate in Deliveroo’s upcoming £8.8 billion float on the London Stock Exchange (LSE).
This marks the latest blow for Deliveroo’s IPO, due to take place next week, potentially marking the largest listing in London in a decade.
Yesterday a damning new report from the Bureau of Investigative Journalism, which analysed thousands of invoices from couriers across the UK, revealed that one in three Deliveroo riders made less than £8.72 an hour, the national minimum wage for workers over 25.
This has raised major concerns among investors amid concerns that the gig-economy model on which Deliveroo relies is under threat.
It comes after Uber, which pioneered the gig economy model, announced it would give all its UK drivers the same rights as workers, placing increasing pressure on companies like Deliveroo to do the same.
While investors fear the growing worker backlash against the gig economy model could harm Deliveroo’s future profitability, others are concerned about the dual-class share system it is implementing when it goes public.
The company confirmed earlier this month that it will use a new dual-class share system, which allows Shu to retain extra voting rights in order to protect the company from any hostile takeover.
Currently companies using a dual-class structure cannot list on the lucrative FTSE indices, but these rules could soon change under Chancellor Rishi Sunak.
Investors have raised concerns that this system could not only prevent Deliveroo from trading on the premium indices should the rules fail to change, but would prevent investors from having any say in how the company is run for years.