LONDON (Reuters) – British money manager Legal & General Investment Management said on Thursday it is unlikely to participate in food delivery firm Deliveroo’s upcoming initial public offering (IPO) due to the enhanced voting rights held by founder Will Shu.
Deliveroo is in the final stages of what could be Britain’s biggest stock market debut in nearly a decade, setting a price range on Monday that values it at up to $12 billion.
LGIM said in an emailed statement to Reuters that it has strongly recommended to Britain’s Financial Conduct Authority that companies with unequal voting rights structures should not be included in the FTSE indexes.
“It is important to protect minority and end-investors against potential poor management behaviour, that could lead to value destruction and avoidable investor loss,” LGIM said.
Deliveroo is planning to issue preference shares to Shu, its founder and chief executive, that would give him 57.5% of the shareholder voting rights even though he holds only a 6.3% stake.
Hence the company will be able to achieve only a standard listing rather than a premium listing that would give it access to the FTSE indexes.
However, that could change as Britain looks to modernise its listing rules following a review commissioned by Finance Minister Rishi Sunak and led by former European Commissioner Jonathan Hill.
Earlier this week, Aviva Investors investment chief David Cumming said Aviva will not be participating in the Deliveroo IPO partly because of concerns over worker rights.
LGIM said it sees increasing signs of countries and governments reviewing the so-called gig economy status, a phrase describing an employee system where temporary work is common.
“We believe in the active ownership of the companies in which we invest, and think change from within can be the most impactful way to influence positive change in a company,” LGIM said.
Deliveroo’s IPO prospectus showed the company is involved in legal proceedings in a number of countries including the UK, France, Spain, the Netherlands and Italy, as it faces challenges around the status of its drivers as independent contractors.
A Deliveroo spokesman said significant demand has meant its deal was covered across the full price range by the end of the first morning of presentations to potential investors.
“Demand has continued to build since then, including via our community offer, and we look forward to welcoming new shareholders next week alongside our currently highly respected existing investors,” the spokesman added.
(Reporting by Abhinav Ramnarayan in London; Editing by Rachel Armstrong and Matthew Lewis)
