(Adds comments by LGIM and Deliveroo, company background)
By Abhinav Ramnarayan
LONDON, March 25 (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)
Legal & General (LGEN)
