News and blog

Deliveroo’s IPO Tanks after Workers Protest, Investors Revolt

The Private Equity Stakeholder Project has been working with the Independent Workers Union of Great Britain (IWGB) and UK group ShareAction to engage investors regarding Deliveroo, a venture capital-backed UK-based food delivery company that operates on a gig work model. 

Similar to Doordash, GrubHub, and Uber Eats in the US, the riders/drivers are independent contractors who lack workplace rights and protections. Deliveroo has 50,000 riders in the UK and tens of thousands more around the world. Amazon is the largest investor in Deliveroo.

On March 25 the IWGB, ShareAction, and PESP released an investor brief looking at the risks posed by Deliveroo’s treatment of workers. The three organizations also hosted an investor forum aimed at current and potential investors in Deliveroo’s IPO.

A number of large institutional investors stated publicly that they would not invest in the Deliveroo IPO, citing concerns about workers and the sustainability of the company’s business model.  Investors that said they would skip Deliveroo’s IPO included Aviva, Aberdeen Standard, Legal & General, BMO, M&G, CCLA, Jupiter, Rathbone Greenbank, Hargreaves Lansdown, Scottish Mortgage, and Edentree.

EdenTree investment management fund manager Ketan Patel stated, “The Deliveroo business model is best characterised as a race to the bottom with employees in the main treated as disposable assets – which is the very antithesis of a sustainable business model.”

Following protests by workers and the revolt by institutional investors, Deliveroo’s value sunk by $4.5 billion – 39% less than the valuation the company had sought a week prior. The central issue investors have raised was the company’s treatment of workers. A recent UK Supreme Court decision required Uber to reclassify its drivers as workers.

The company had initially sought a valuation of up to $12 billion through its IPO.  Following the growing investor revolt, Deliveroo dropped its target valuation, securing a $10.5 billion valuation through the IPO.  The stock has since plunged by more than 35%, and is currently trading at around 252 pence/share, or around $7.5 billion. By comparison, when DoorDash went public in December, its stock price soared by 86% the day after its IPO.

Media coverage:

CNBC, Mar 31, 2021: “Amazon-backed Deliveroo tanks in London market debut”

Independent, Mar 29, 2021: “Union urges Deliveroo investors to push worker rights ahead of £8.8 billion IPO”

Bloomberg, Mar 30: “Deliveroo Founder’s $618 Million Fortune Hit by Low-Pay Protests”

Sydney Morning Herald, Apr 1, “Deliveroo’s IPO tanks driven by concerns over treatment of workers”

London Loves Business, Mar 28, “Deliveroo riders to strike and investor briefing exposes further risk”

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