Another top investor has revealed it will not invest in Deliveroo at its upcoming stock market float, adding to growing criticism of the meal delivery company’s treatment of workers.
BMO Global Asset Management on Thursday said it would not be investing in Deliveroo and that the company’s labour practices were one important part informing the decision.
It came after two of the UK’s largest investment managers, Aviva Investors and Aberdeen Standard Investments, both cited concerns over treatment of workers for their decision to skip Deliveroo’s initial public offering (IPO).
Some 29 investors will today discuss the float and worker rights issues in a meeting organised by ShareAction, a group that campaigns on investment issues.
Andrew Millington, head of UK equities at Aberdeen Standard, said: “As long-term investors, we’re looking to invest in businesses that aren’t just profitable, but are sustainable. Employee rights and employee engagement are an important part of that.
“We will not be taking part in the Deliveroo IPO as we are concerned about the sustainability of the business model, including but not limited to its employment practices, and also the broader governance of the business.”
Deliveroo, founded in 2013 by Will Shu, a London investment banker, is seeking a valuation of up to £8.8bn when it floats on 7 April.
It is one of the most prominent British companies in the gig economy, with its delivery workers paid on the basis of single jobs rather than given a steady salary and the benefits associated with employee status.
The flexibility offered by gig economy companies is welcomed by some people, but investors are increasingly taking notice of concerns that the business model shifts risk from the company on to workers.
A UK supreme court decision to classify workers at Uber as employees has also highlighted a possible risk of legal action and increased costs for companies like Deliveroo. Deliveroo has set aside £112m to cover the possible costs of drivers taking legal action.
Martin Buttle at ShareAction, said: “There are a number of investors who are very aware of the issues at Deliveroo and are considering their approach.”
Montreal-headquartered BMO is one of the largest banks in North America. It counted $950bn (£692bn) in assets group-wide in December.