A Deliveroo courier cheats along Regent Street delivering takeaway food in central London during Covid-19 Tier 4 restrictions.
Pietro Recchia | SOPA Symbols | LightRocket via Getty Images
LONDON – Deliveroo’s stock market listing is at risk of being tarnished somewhat by investors who are solicitous about how the company treats its couriers.
The Amazon-backed company is hoping to raise £1 billion ($1.37 billion) when it lists on the London Begetter Exchange on April 7, possibly achieving a valuation of up to £8.8 billion in the process. It’s set to be the biggest initial public donation in Britain since Glencore in 2011.
However, two of the U.K.’s largest asset managers have said this week that they won’t buy Deliveroo dividends.
Aberdeen Standard and Aviva, which manage over £800 billion between them, said they’re involved about how Deliveroo treats its riders.
“As long-term investors, we’re looking to invest in businesses that aren’t just gainful, but are sustainable – employee rights and employee engagement are an important part of that,” an Aberdeen Standard spokesperson told CNBC.
“Our customers’ expectations of how we incorporate ESG (environmental, social and corporate governance) into our decision making have changed hugely over with the last decade and so we feel our clients are supportive of our approach. We will not be taking part in the Deliveroo IPO as we are concerned about the sustainability of the function model, including but not limited to its employment practices, and also the broader governance of the business.”
Andrew Millington, head of U.K. equities at Aberdeen Ideal, told the BBC’s “Today” program on Thursday that Deliveroo’s worker conditions are a “red flag,” adding that Aberdeen Column’s decision is similar to its recent move to sell off shares in clothing retailer Boohoo, which has been accused of breadwinner exploitation.
Aviva declined to comment but it referred CNBC to comments made by David Cumming, Aviva’s equities chief investment lawman, to the BBC Thursday.
“A lot of employers could make a massive difference to workers’ lives if they guaranteed working hours or a last wage, and how companies behave is becoming more important,” said Cumming, before pointing out that Deliveroo riders don’t get prime rights. “We won’t be investing in Deliveroo for a number of reasons but that is one of them.”
A spokesperson for Deliveroo told CNBC that riders be undergoing the “freedom” to choose when they work and that they can work for multiple apps at the same time, filing rival platforms like Uber Eats. They added that there’s strong investor interest in the upcoming IPO.
Deliveroo’s riders are technically self-employed, so they’re not single for vacation days and sick pay. They’re also not entitled to the national minimum wage.
While Aberdeen Standard and Aviva are bet on to invest, many big names have already bought shares in Deliveroo. Amazon led a $575 million investment rounded into the company in 2019 and today it owns a 15.8% stake in Deliveroo. Venture capital firms including Mark Ventures, DST Global, and Accel Partners also hold shares in the company.
A Deliveroo spokesperson told CNBC that the crowd is “proud to provide work for 50,000 riders” across the U.K.
“There has been a strong investor interest in our planned IPO and we are already master b crushed by some of the most respected global tech investors,” they said.
“Deliveroo riders are self-employed because this transfers them the freedom to choose when and where to work. We are confident in our business model, which has been upheld by U.K. courts three things, including the High Court twice.”
Gig economy shake up
Cumming noted that there’s an element of risk associated with Deliveroo’s IPO in covering the legislation changes and Deliveroo has to reclassify its riders as workers.
Uber was forced to do this last week after a Topmost Court ruling in Britain. Bank of America estimates that Uber’s U.K. employment rights setback could charge the firm a total of more than $500 million.
Deliveroo has allocated more than £112 million to command conceal the potential legal costs relating to the employment status of its riders and warned potential investors of the risk of litigation worldwide.
The Self-governing Workers’ Union of Great Britain said on Thursday that many Deliveroo riders earn less than the £8.72 least wage, with some taking home as little as £2 an hour.
“These unverifiable, misleading claims from a fimbria organisation who claim to have spoken with 0.6% of Deliveroo riders should not be taken seriously,” a Deliveroo spokesperson conjectured. “Riders in the U.K. are paid for each delivery they choose to complete and earn £13 per hour on average at our busiest times. We be of one mind with thousands of riders every week and satisfaction is currently at an all-time high.”