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Blow for flotation

Aberdeen Standard and Aviva shun Deliveroo IPO

Will Shu

Will Shu, founder of Deliveroo

Two of Britain’s biggest institutional investors say they will not buy shares in food courier business Deliveroo because of concerns over its treatment of workers.

The delivery company is already raising eyebrows among investors over its top-end valuation of £8.8bn despite not yet making a profit.

Aberdeen Standard Investments and Aviva Investors, which together manage more than £800bn of assets, said they re unhappy about the working conditions of Deliveroo’s riders.

The move by the two institutions will be seen as indicative of the shift in attitude towards wellbeing and social issues as factors in investment decisions.

Deliveroo riders are self-employed, meaning they are not entitled to earn a minimum wage from the company, holiday and sick pay.

The company responded to investors concerns by saying its riders had “freedom” to choose their hours. It is also including special benefits for riders in the initial public offering which is due next month.

David Cumming: ‘not investing’

Andrew Millington, head of UK Equities at Aberdeen Standard Investments, said the conditions were a “red flag”, adding: “We wouldn’t be comfortable that the way in which its workforce is employed is sustainable.”

He went on to compare Aberdeen Standard’s recent decision to sell off Boohoo shares following allegations of worker exploitation at the online clothing company.

David Cumming, chief investment officer at Aviva, said investors were taking social responsibilities “a lot more seriously”.

Mr Cumming, formerly of Standard Life Investments, said: “A lot of employers could make a massive difference to workers’ lives if they guaranteed working hours or a living wage, and how companies behave is becoming more important.”

He pointed out that Deliveroo workers are “currently classed as riders [which means] they don’t necessarily get basic rights for minimum wage, sick leave or holidays”.

He said: “We won’t be investing in Deliveroo for a number of reasons but that is one of them.”

The risk to gig economy companies’ business models increased earlier in March when Uber lost a long-running legal battle and was required to award its drivers basic employment rights such as the minimum wage and holiday pay. Uber had argued its drivers were not workers but the Supreme Court rejected its claim.

Pirc, a corporate governance adviser, said: “After recent events at Uber it would be a brave investor that did not consider the nature of the employment relationship to be a central factor in deciding whether to invest in gig economy employers.”

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