Deliveroo has failed to recover from its disastrous initial public offering (IPO) as investors continue to snub its shares over governance and labour concerns.
According to new data from Morningstar, just four out of 18,000 mutual funds on the continent have invested in Deliveroo since it went public in March, and only one in the UK.
This is reflected in Deliveroo’s share price, which nosedived 26 per cent in its first day of trading leading analysts to dub it the “worst IPO in London’s history”.
Since its highly anticipated public listing, its shares are still trading at around 251p per share, well below its listing price of 390p.
Despite emerging as a clear winner of the pandemic, investors have avoided Deliveroo’s stock over concerns that its gig-economy model could soon be shunned by the industry at large, as big players like Uber begin offering their drivers worker’s rights.
While just four mutual funds in the EU invested in the delivery giant, including two Europe domiciled funds from Morgan Stanley and Franklin Templeton, the vast majority of investors come from North America.
Independent economic charity Friends Provident Foundation’s investment engagement manager, Colin Baines, told the Financial Times that the pandemic has driven a rise in conscientious investing, placing a focus on workers rights and social issues.
He said: “Having Deliveroo in portfolios is a sure-fire way to flag to clients that perhaps they’re not integrating social issues (into investment decisions) that well.”
In March a damning 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.
Just weeks earlier gig-economy pioneer Uber announced it would now consider all of its 70,000 UK drivers ‘workers’, allowing them increased rights and pay.
Deliveroo, which has so far never turned a profit, has previously said its model would struggle to function if it was required to class its riders as workers.
This frightened investors who predict its only a matter of time before similar legal challenges over workers rights are brought to Deliveroo.